Visa, Mastercard pause crypto push in wake of industry meltdown – sources

Feb 28 (Reuters) – U.S. payments giants Visa ( VN ) and Mastercard ( MA.N ) are slowing plans to forge new partnerships with crypto firms after a series of high-profile collapses shook faith in the industry, people familiar with the matter told Reuters.

The crypto industry saw a stunning reversal of fortunes in 2022, as bankruptcies of industry majors FTX and BlockFi rattled investors and increased regulatory scrutiny of the sector.

Both Visa and Mastercard have decided to push back the launch of certain crypto-related products and services until market conditions and the regulatory environment improve, said the people, who asked not to be named as the talks were confidential.

“Recent high-profile failures in the crypto sector are an important reminder that we have a long way to go before crypto becomes part of mainstream payments and financial services,” said a spokesperson for Visa, the world’s largest payment processor.

However, it does not change the company’s crypto strategy and focus, the spokesperson added.

A Mastercard spokesperson said: “Our efforts continue to focus on the underlying blockchain technology and how it can be used to help address current pain points and build more efficient systems.”

CRYPTO RETREAT

Over the past couple of years, major card companies have warmed to crypto as the asset class’ popularity exploded, with some tipping it as the next big thing in finance.

Card companies, which pocket a small percentage of the dollar value of transactions they process, had announced several partnerships with crypto firms and put in place dedicated teams to explore blockchain technology.

Mastercard teamed up with crypto lender Nexo in April to launch what it called the world’s first “crypto-backed” payment card.

In November, Visa terminated its global credit card agreements with FTX, just a month after announcing an expanded partnership with the exchange.

Card company American Express ( AXP.N ) said in 2021 it would consider using crypto as a possible option for redeeming rewards points in the future.

But it does not see crypto tokens as a strategic priority in the near term, said a source familiar with the matter.

“In the near term, we do not see crypto replacing our core payment and lending services,” an AmEx spokesperson said in an emailed statement, adding that the company continues to explore meaningful use cases for the technology.

“They cannot and should not move forward until there is a clear regulatory framework,” said Thomas Hayes, chairman and managing member of investment firm Great Hill Capital.

“Delays cannot be attributed to their core business – as it remains strong. They are related to an uncertain regulatory environment for crypto and the demand/interest in crypto services declining in the short term.”

Reporting by Manya Saini in Bengaluru; Editing by Sweta Singh and Saumyadeb Chakrabarty

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