Friday, December 10, 2021
Visa works with more than 60 crypto platforms, which coupled with its global network of consultants and product experts, positions it well to help financial institutions evaluate strategies and opportunities in the crypto market, the company said. “We’ve seen a material shift in our clients’ mindset in the last year, from a desire to explore and experiment with crypto, to actually building a strategy and product road map,” said Carl Rutstein, global head, Visa Consulting and Analytics.
A survey of 6,000 financial decision makers across eight markets recently conducted by Visa found 18 percent would be likely or very likely to switch their primary bank to one that offers crypto-related products in the next 12 months.
“As consumers change their approach to investing, where they bank and their views on the future of money, every financial institution will need a crypto strategy,” said Terry Angelos, Visa senior vice president and global head of fintech.
Visa's crypto advosory comes as public and private interest in cryptocurrencies is escalating. The Visa survey revealed crypto awareness among financial decision makers is near universal, at 94 percent of respondents worldwide.
Meanwhile, members of U.S. House of Representatives held a fact-finding hearing on Dec. 8, 2021, that included testimony from the heads of six cryptocurrency companies, and a similar hearing is scheduled in the Senate for Dec. 14.
Currently, no overarching or centralized regulatory framework is in place for cryptocurrency markets. Some cryptocurrency exchanges and stablecoin issuers have obtained state money transmitter licenses, and at least one crypto platform, Paxos, has garnered preliminary approval from the Office of the Comptroller of the Currency for a national bank charter.
“Given the digital assets sector’s growth and evolution, several questions have arisen as to how regulators can ensure investor protections, ensure consumer protections, and maintain market integrity,” the House Financial Services Committee wrote in a memorandum leading up to its Dec. 8 hearing.
Gary Gensler, chairman of the Securities and Exchange Commission, suggested cryptocurrencies should be registered as securities and regulated by the SEC. The Commodity Futures Trading Commission also pushed for regulatory jurisdiction over crypto. But crypto executives testifying before the House panel criticized those notions. They argued that cryptocurrencies don’t fit neatly within existing regulatory frameworks and that lawmakers should tailor a regulatory framework specific to the industry.
“Given the significant structural difference between securities markets and digital asset markets, we believe that regulators should not react by simply imposing the existing regulatory framework – designed for a different context—on digital asset activities,” Alesia Haas, CEO of Coinbase Inc., told lawmakers. “Doing so would be like responding to the automobile’s invention by requiring cars to be pulled by horses.”
Earlier this year, Coinbase became the first crypto company to be listed by a U.S. stock exchange, Nasdaq. This week’s House hearing and next week’s Senate hearing have been described as fact-finding exercises, and there is no clear consensus on whether regulation is needed—generally Democrats favor regulation, while Republicans oppose it.
Marwan Forzley, co-founder and CEO of Veem, believes some type of regulation is needed to foster a robust crypto market. Veem is a global payment provider that uses blockchain, the technology underlying crypto, as a settlement rail. With regulation, “the more likely it [the crypto market] is to achieve scale,” Forzley told TheGreen Sheet. “It’s important for the industry and government to figure out ways to regulate this industry.”
The overall cryptocurrency market was valued at $3 trillion in mid-November, up from about $1.3 trillion in early July, according to the website Statista. The market value of stablecoins, a type of cryptocurrency that pegs value to fiat currencies (like the U.S. dollar), alone, grew nearly fivefold during the first half of the year, rising from $28 billion to $130 billion, according to a presidential working group tasked with studying the need for crypto regulation.
A recent entrant to the marketplace has been crypto-linked credit cards. Most allow cardholders to earn rewards denominated in bitcoin or other cryptocurrencies. Some support purchases using cryptocurrencies, which get converted into fiat currency immediately, thereby eliminating the risk of volatility for payment-accepting merchants. According to Visa, more than $1 billion was spent using crypto-linked Visa cards in the first half of 2021; by early November, that total had grown to $3.5 billion, according to a report in the website TechCrunch.
“Crypto represents a technological shift for money movement and digital ownership,” Angelos said. Visa’s recent survey found nearly one in three of crypto-aware adults already owns or uses cryptocurrency, and 62 percent of that group said their use had increased over the past year.
Among current crypto owners, 81 percent expressed interest in making payments with crypto cards; 84 percent are interested in crypto-rewards cards, Visa said.
Visa is not alone in promoting crypto credit and debit cards. Mastercard launched a global crypto card program, and last month announced partnerships with three of the leading cryptocurrency service providers in the Asia-Pacific region to support crypto-funded Mastercard credit, debit and prepaid cards.
As is the case with Visa-branded crypto cards, crypto card transactions enter the Mastercard network as traditional fiat currencies.
“Cryptocurrencies are many things to people—an investment, a disruptive technology, or a unique financial tool. As interest and attention surges from all quarters, their real-world applications are now emerging beyond the speculative,” said Rama Sridhar, Mastercard executive vice president for digital and emerging partnerships, Asia Pacific. “In collaboration with these partners that adhere to the same core principles that Mastercard does—that any digital currency must offer stability, regulatory compliance and consumer protection—Mastercard is expanding what is possible with cryptocurrencies to give people even greater choice and flexibility in how they pay.” 
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