Visa partners with FTX in a bet that shoppers will still want to use cryptocurrencies in a bear market

Visa is betting that crypto investors will still want to use their digital currencies, even if prices plummet this year.

The payments giant is teaming up with global exchange FTX to offer debit cards in 40 countries with a focus on Latin America, Asia and Europe. The cards, which are already available in the US, will link directly to a user’s FTX cryptocurrency investment account. The move allows customers to use digital currencies without moving them from an exchange, “like you would with any bank account,” according to Visa’s CFO.

“Even though the values ​​have dropped, there is still a steady interest in crypto,” Visa CFO Vasant Prabhu told CNBC in a phone interview. “We don’t have a position as a company on what the value of cryptocurrency should be or whether it’s a good thing in the long run – as long as people have things they want to buy, we want to facilitate that.”

The agreement comes as the price of bitcoin and other cryptocurrencies have been halved from their all-time highs in November. Bitcoin was trading near $20,000 as of Friday morning, down 57% since January.

It is Visa’s latest foray into the space and adds to more than 70 crypto partnerships. The San Francisco-based company has already merged with FTX’s competitors Coinbase and Binance. Rival Mastercard has been on a similar ride, also partnering with Coinbase on NFTs and Bakkt to allow banks and merchants on the network to offer crypto-related services. American Express has said it is exploring using the cards and network with stablecoins, which are pegged to the price of a dollar or another fiat currency. But the CEO said earlier this year that consumers shouldn’t expect to see an AmEx crypto-linked card “anytime soon.”

FTX CEO Sam Bankman-Fried acknowledged a certain irony in these partnerships. Cryptocurrencies like bitcoin were first designed to get around banks and middlemen. But banks and payments companies are suddenly embracing the technology as cryptocurrencies become mainstream, helping to drive payment volumes.

“It’s a technology that we certainly see disrupting traditional payment networks,” Bankman-Fried told CNBC in a phone call. “It’s a decision you have to make as a traditional payments company: do you want to lean into this or do you want to fight it? I respect the fact that a lot of them are leaning into it.”

Bankman-Fried also said enabling card payments was key to the market’s growth beyond being a speculative asset, or for some, a store of value. The Visa partnership makes it easier for merchants to accept cryptocurrencies without setting up proprietary technology. Visa and FTX convert it on the back. As Prabhu said, “everything is done behind the scenes.”

Both executives said the biggest opportunity is in emerging markets, where currency volatility and inflation make access to digital assets more attractive than they might look in what Bankman-Fried called Turkey and Argentina, where inflation has topped 83% and 78%, respectively. .

“A lot of these things are potentially cool and valuable in the U.S., but more so when you look globally,” Bankman-Fried said. “That’s where you find places with really bad toll rail options and a lot of demand for something better.”

Visa’s Prabhu pointed to the demand for stablecoins, which are either pegged to the price of a dollar or another fiat currency. The CFO said they often see people open accounts to hold crypto “and use them like they would a bank account.”

Despite mainstream adoption and Fortune 500 companies like Visa embracing the technology, the industry has had some high-profile explosions this year. Lenders Celsius and Voyager filed for bankruptcy after freezing withdrawals, and the failure of hedge fund Three Arrows Capital resulted in billions being wiped off the markets in a matter of days. Visa’s CFO said so far the company has been able to avoid exposure to a crypto crisis.

“Nothing is risk free, you do the best you can – so far the risk controls have worked well and our due diligence has worked well,” Prabhu said. “Overall, we’ve enabled innovation while protecting the Visa brand.”