It appears that Visa and Mastercard have temporarily suspended the launch of their crypto products, at least until market conditions and industry regulation improve.
The news was also reported by Watcher.Guru’s official Twitter account, which reads:
JUST IN: Visa & Mastercard pause launch of #crypto products until market conditions and regulation improves.
— Watcher.Guru (@WatcherGuru) February 28, 2023
Visa, Mastercard and the crypto sector: latest news
As anticipated, Visa and Mastercard’s efforts on cryptocurrencies are taking a back seat due to the market setback. Recently, a massive amount of cryptocurrency exchanges and companies filed for bankruptcy or were on the verge of collapse.
The bull market was curbed by a depleting stablecoin, TerraUSD. The contagion of this fall lasted throughout the year, which caused several other companies to go under.
In the midst of all this industry turmoil, the crypto efforts of Visa and Mastercard decided to slow down.
Indeed, according to Reuters, the US payment companies Visa and Mastercard were putting the brakes on plans to forge new partnerships with crypto companies.
In addition, several sources attributed this decision to the growing collapse of several large companies that occurred during 2022. In this regard, a Visa spokesperson stated the following:
“The recent high-profile bankruptcies in the cryptocurrency industry remind us that we still have a long way to go before cryptocurrencies become part of traditional payments and financial services.”
The news comes as even more of a shock when one considers the fact that earlier this month, Wirex, a crypto payments company, partnered with Visa to provide cryptocurrency-enabled debit and prepaid cards to more than 40 countries.
Visa and Mastercard’s statements regarding recent decisions involving crypto
In addition, over the past two years, Visa has repeatedly embraced Bitcoin and other assets. Mastercard has also been taken aback. However, Mastercard’s spokesperson noted that the company will not change its stance on cryptocurrencies, which includes its strategy and focus.
In fact, he stated:
“Our efforts continue to focus on the underlying blockchain technology and how it can be applied to help address current pain points and build more efficient systems.”
Therefore, although the cryptocurrency market was recovering, the big players did not yet seem ready. This year, the US Securities and Exchange Commission (SEC) visibly stirred up the industry.
As such, the regulatory review could affect market adoption. Thomas Hayes, president of investment firm Great Hill Capital said:
“They cannot and must not move forward until there is a clear regulatory framework. The delays are not attributable to their core business, as it remains strong. They are related to an uncertain regulatory environment for cryptocurrencies and declining demand/interest for cryptocurrency services in the near term.”
An AmEx representative also noted how cryptocurrencies will not replace major payment and lending services in the short term.
The current situation of Ethereum and Bitcoin in the market
According to cryptocurrency analytics firm Santiment, the supply of Bitcoin (BTC) and Ethereum (ETH) on exchanges has hit a five-year low. The firm noted that the development could lead to limited future sell-offs.
According to Santiment, the trend of moving assets from centralized exchanges to self-custody has increased since the FTX collapse. As we know, the fall of FTX took many investors by surprise.
It was retail investors who suffered the most. Additionally, the event led people to lose confidence in centralized exchanges and consequently to transfer their assets into self-custody.
All this clearly also affected Visa and Mastercard’s recent crypto decisions. On the other hand, Bitcoin (BTC) and Ethereum (ETH) with the lowest supply on exchanges in five years might be a bullish development.
This means there is less likelihood of a sell-off by investors. The data give bulls more confidence, which they may need right now. Bitcoin (BTC) is hovering around the $23,000 levels after failing to breach the $25,000 resistance.
Furthermore, the number of Bitcoin whales has declined significantly. As for Ethereum (ETH), it is trading at $1.6K, testing the $1700 level.
Focus on the crypto market: is Visa and Mastercard’s decision justified?
According to Dune, the ratio of staked Ethereum to its available supply, or “staking ratio,” is now about 14%. In contrast, the staking ratio of other proof-of-stake (PoS) blockchains such as Cardano (ADA) and Solana (SOL) is over 70%.
However, the amount of staked ETH is expected to increase after the long-awaited Shanghai upgrade. The Shanghai upgrade will finally allow the release of staked ETH. Many expect there to be a sell-off, but most staked ETH are at a loss, so a sell-off is unlikely.
The Shanghai update also led to an increase in the popularity of liquid staking. Liquid staking is the technique of locking in money to reap rewards while maintaining access to it.
Liquid staking is becoming increasingly popular, making it the second largest segment of crypto in terms of total blocked value (TVL). Nearly $14 billion in digital assets have been placed in 71 liquid staking systems, according to data from DeFi Llama.
Hence, given the recent crypto market situation mentioned above, one wonders whether Visa and Mastercard did not act in the right way by discontinuing their crypto services, or whether, instead, they acted too quickly.
Source: https://en.cryptonomist.ch/2023/03/01/visa-mastercard-stop-crypto-products/