Editor's take: Mastercard's pledge to support cryptocurrencies on its network this year is the latest indicator of increased acceptance of digital currencies among major financial firms. So long as consumer adoption pans out and regulatory hurdles don't derail the whole thing, it seems as though the future could be very bright for digital currencies.
Just days after electric automaker Tesla announced a $1.5 billion investment in Bitcoin that sent the cryptocurrency’s value to record heights, another major player is gearing up to hit the field.
Mastercard said it is now preparing for “the future of crypto and payments,” announcing that it will start supporting select cryptocurrencies directly on its network this year. The financial services corporation didn’t specify which digital assets it will embrace initially but did note that they will be “very thoughtful” about which assets they choose to adopt.
"Our philosophy on cryptocurrencies is straightforward: It’s about choice. Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value – traditional or crypto – however they want. It should be your choice, it’s your money."
Mastercard said it is looking for four key items when considering what crypto to add to its network. Privacy and security are paramount, as are strict compliance protocols, “including Know Your Customer, a requirement meant to snuff out illegal activity and deception in payment networks.” The digital assets must also adhere to local laws and regulations where they are used and finally, they will need to “offer the stability people need in a vehicle for spending, not investing.”
Late last year, PayPal started letting users buy, hold and sell the “big four” cryptocurrencies on its platform: Bitcoin, Ethereum, Litecoin and Bitcoin Cash. One would think that Mastercard would also be interested in these currencies but only time will tell.
Mastercard said supporting crypto is a big change that requires a lot of work and thus, didn’t set a specific date for adoption outside of the general 2021 window.
In related news, Bank of New York Mellon on Thursday announced the formation of a new digital assets unit that’ll be led by Mike Demissie. The team “is currently developing a client-facing prototype that is designed to be the industry's first multi-asset digital custody and administration platform for traditional and digital assets,” including cryptocurrencies.
Masthead credit Wit Olszewski