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Mastercard plans to announce a program on Monday called Crypto Source that will make it easier for banks and other financial institutions to offer cryptocurrency trading.
The program will act as a “bridge” between crypto trading platform Paxos and banks, the company said. Mastercard will also take care of regulatory compliance and security, two sticking points for banks wanting to get involved in offering crypto trading services.
Specifically, Paxos will take care of custody and trading services, while Mastercard will integrate these services into banks' interfaces.
What we are announcing today is a connected approach to services that will help bring users safely and securely into the crypto ecosystem," said Mastercard's cyber and intelligence president Ajay Bhalla said in a statement. "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.”
Indeed, banks have taken notice, with everyone from Goldman Sachs to JP Morgan creating crypto teams catering to institutional investors. So far, however, traditional finance players have largely avoided shilling their crypto trading services to retail investors.
Mastercard’s move will also likely am up the competition with exchanges like Coinbase and FTX, which have gone on buying sprees as they aim to consolidate the crypto industry following the recent collapses of big players like crypto broker Voyager Digital and crypto lender Celsius Networks.
One upside of the recent crypto winter might be the increased scrutiny it has invited from regulators. This, in turn, is likely to create a stronger regulatory framework that can help assuage retail investors’ fears – especially if household-name banks facilitate the trading.
We’re excited to build on our long-term partnership with Paxos–co-innovating to bring safe and secure technology to financial institutions," said the chief digital officer at Mastercard Jorn Lambert. "Our crypto product innovations will provide choice at scale and continue to bring one-of-a-kind opportunities to financial institutions as they seek to offer new, advanced services to their customers."
Both Mastercard and Visa, its longtime payments rival, have made moves in crypto recently, from the former’s partnership with Coinbase on NFTs to the latter’s ink-up with FTX on crypto debit cards.