How Mastercard is Bringing Cryptocurrency Trading to Banks

According to Mastercard Press release, the firm will bring crypto trading capabilities to banks. Mastercards' 2022 New Payment Index highlighted that 29% of respondents globally hold cryptocurrency as an investment and 65% indicating crypto-related services should be part 'n parcel of services provided by their financial institutions. Understanding there is demand, Mastercard has introduced Crypto Source, a program to enable financial institutions to bring secure crypto trading capabilities and services to their customers.

Ajay Bhalla, President, Cyber & Intelligence at Mastercard has stated, “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,”.

How will Mastercard Accomplish this?

Mastercard has partnered with licensed and regulated crypto custody providers, to create an ecosystem that provides  a comprehensive suite of buy, hold and sell services for select crypto assets, augmented with proven identity, cyber, security and advisory services. In addition to Crypto Source, Mastercard will extended Crypto Secure, to ensure security to the crypto ecosystem and support card issuers in their compliance with complex regulations. 

More specifically, Mastercard will use Paxos crypto trading platform to let financial institutions offer cryptocurrency trading to their customers. Paxos will handle custody and trading, while MasterCard will handle regulatory compliance and security. Paxos offers similar services to PayPal, which launched crypto services in late 2020. The platform is known for providing blockchain infrastructure that allows other companies to offer crypto-related products and services

What Does the Offering Include?

The offerings to financial institutes will include:

  • Technology and partnership support to enable buy, hold and sell of select crypto assets
  • Security management including Mastercard’s identity solutions, crypto analytics, transaction monitoring, anti-money laundering, ‘Know Your Business’ and lifecycle stages, cybersecurity, and biometrics
  • Crypto spend and cash out capabilities offered through a range of products, including crypto cards, open banking and cross border services. Financial institutions would also be able to offer additional functionality using Mastercard’s technology such as digital receipts and loyalty solutions
  • Crypto program management including program design, product development and technology implementation, as well as go-to-market optimization and marketing consultancy services, providing end-to-end support for banks, fintechs and issuers to offer crypto programs at scale

The So What?

As the cryptocurrencies normalize in both value and maturity, so does the adoption by mainstream. Financial institutions and service providers will be remiss to not enter a market, where there demand. In the end, its about maintaining market share by aligning and providing services that customers expect from their providers.