Banks will offer crypto trading services

Mastercard will help banks get the green light to offer crypto trading services.

Crypto trading with Mastercard and banks

Electronic payments giant Mastercard, which has been developing its platform to offer services with cryptocurrencies for some time, will help large banks that wish to do so get the green light to offer their customers the ability to trade digital assets. 

The payments giant will act as a “bridge” between banks and Paxos, a cryptocurrency trading platform already used by PayPal. Mastercard’s program will address regulatory compliance and security, two main reasons cited by banks for avoiding the asset class.

Jorn Lambert, Chief Digital Officer at Mastercard, said:

“There’s a lot of consumers out there that are really interested in this, and intrigued by crypto, but would feel a lot more confident if those services were offered by their financial institutions. It’s still scary for some people out there.”

According to early rumors reported by US news outlets, the new program will be announced next Monday. The service is expected to be called Crypto Source, and it will make it much easier for banks and other financial institutions to offer cryptocurrency trading.

It is a service that many banks and financial institutions will surely appreciate, considering how the demand for crypto services is increasing significantly among retail customers.

The Mastercard New Payments Index 2022 recorded that about 29% of respondents at the level, would already have cryptocurrencies in their portfolio as a form of investment. Another 65% of the sample, would indicate a preference for cryptocurrency-related services to be provided by their current trusted financial institution.

Also according to early rumors, the new service will partner with specific regulated and licensed cryptocurrency custody service providers. Through this arrangement, interested banks and financial institutions would be facilitated to obtain authorization to offer trading services to customers. 

Mastercard partners with Paxos

This new Crypto Source offering will also include Mastercard Crypto SecureTM to bring additional security to the crypto ecosystem and support card issuers in their compliance with complex regulations.

Mastercard’s main partner in this project will be the Paxos platform, which is already being used by PayPal, to offer services similar to those already offered by Paypal, which has offered the ability to make payments in Bitcoin since November last year. 

Paxos’ service offers a range of products that allow companies to integrate the buying, selling, holding and sending of cryptocurrencies into their applications. Paxos Crypto Brokerage is a turnkey, easy-to-integrate API-based solution that provides access to the $200 billion cryptocurrency market while managing the underlying regulatory and technological complexity.

Since June, the electronic payments giant has allowed its US and UK customers to move funds in Bitcoin and Ethereum from their wallets to external wallets. Now Mastercard will also offer a similar service. Along with technology and partnership support to enable the purchase, holding, and sale of selected cryptocurrencies, also included in the service will be security management, including Mastercard’s identity solutions, cryptographic analysis, transaction monitoring, and anti-money laundering.

Paxos CEO Charles Cascarilla said: 

“With Paxos Crypto Brokerage, companies can leverage our expertise and regulatory compliance to easily and securely integrate crypto into their applications. We’re proud to offer financial market infrastructure that supports an open, digital financial future.”

Ajay Bhalla, President, Cyber & Intelligence at Mastercard, said:

“At Mastercard, trust is our business. What we are announcing today is a connected approach to services that will help bring users safely and securely into the crypto ecosystem. Our recent investments in this space, such as the acquisition of CipherTrace and Ekata, are providing us with a unique set of capabilities to help provide our customers and consumers with the most technically advanced solutions available in the market.”

Walter Hessert, on the other hand, Head of Strategy at Paxos, revealed:

“Mastercard has a powerful network of financial institutions around the world. This exciting offering developed by Paxos and Mastercard will give FIs the fastest and most trusted way to offer safe, reliable crypto access for their consumers globally. We’re thrilled to partner with Mastercard to further accelerate the mainstream adoption of digital assets.”

The new service

According to Mastercard Chief Digital Officer Jorn lambert this new service, could greatly increase the company’s core businesses. The service will provide a powerful tool in the hands of financial institutions to be able to handle cryptographic assets more securely, while striving to be as strict as possible with today’s regulations.

Despite the fact that the market is facing a very difficult period, with most stocks having lost more than 50% of their value, this does not mean that its premature end can be foretold.

During an interview two days ago with CNBC, he said: 

“It would be shortsighted to think that a little bit of a crypto winter heralds the end of it — we don’t see that. As regulation comes in, there is going to be a higher degree of security available to the crypto platforms and we’ll see a lot of the current issues getting resolved in the quarters in the years to come.”

As mentioned, this is another important step toward greater adoption of cryptocurrencies by the electronic payment giants. Not only Mastercard but also Visa has been experimenting with crypto services for some time. Last week, Visa began a partnership with cryptocurrency exchange FTX to offer crypto debit cards in 40 countries and has more than 70 crypto partnerships. For its part, American Express has been experimenting with the possibility of using stablecoins in its electronic payments network for months.

These facts show how the crypto industry is probing collaboration with traditional finance players, despite the fact that it was initially born with the idea of overtaking it precisely because of its disintermediation characteristic. The facts are showing that the future will definitely lie amid close cooperation between the two worlds.