Institutional interest in digital assets continues to grow rapidly, proving that cryptocurrencies, stablecoins, and unusable tokens (NFTs) will persist. At the same time, traditional financial institutions are beginning to understand the urgent need to adequately support digital assets. For example, while payment giants like Mastercard and Visa are currently offering crypto-enabled credit and debit cards, they are also entering into partnerships with financial institutions to increase consumer security and confidence in digital currency transactions.
Ajay Bhalla, President of Cyberspace and Intelligence at Mastercard, shed light on the matter, telling Cointelegraph that Mastercard customers and other partners are looking for solutions to ensure that the crypto economy is given the same level of security that consumers receive with traditional ones. experience payment methods. To ensure this, the payment giant recently announced the acquisition of CipherTrace, a blockchain intelligence analysis company that has developed crypto forensics capabilities for over 900 cryptocurrencies.
According to Bhalla, once the contract with CipherTrace, which is expected later this year, is finalized, Mastercard will be able to develop additional tools to identify, detect and prevent fraud and money laundering. Bhalla says:
“We see tremendous potential for digital assets like cryptocurrencies and NFTs to transform our daily experiences – from the way we pay and get paid, to the way we buy products and services, and how we invest . However, the promise of technological advances and enhanced experiences comes with growing concerns about the security of digital assets. “
Given the emerging but innovative nature of digital assets, financial institutions that already support crypto payments need to respond accordingly in order to grow. Dave Jevans, CEO of CipherTrace, told Cointelegraph that he believes that every financial institution in the world will at some point need to monitor cryptocurrency transactions and future risks. Therefore, Jevans notes that Mastercard’s acquisition of CipherTrace is a natural fit for both companies:
“CipherTrace offers unique products like ‘Armada’ that integrate information about banking and crypto transactions. We can now go to market with Mastercard to bring our products to a wider audience in the banking sector. “
Additionally, Jevans mentions that government involvement is an important factor to consider, pointing out that Mastercard’s presence in the US, Europe and Asia will allow CipherTrace to work directly with regulators who are creating a central bank digital currency (CBDC ) want to develop.
In fact, the demand for tools provided by crypto intelligence firms has grown as countries struggle to develop appropriate CBDCs. Recent data from Redfield & Wilton Strategies shows that 30% of 2,500 people surveyed believe a Britcoin CBDC will be detrimental to the UK. In particular, the study found that 73% of respondents are “concerned about the threat of cyberattacks and hacks” while others are concerned about user privacy and interference from other users.
To allay such concerns, Jevans says Mastercard has developed a CBDC testing platform that he hopes CipherTrace will continue to develop: “We can work together here, be it on financial investigations or with regulators developing in the CBD.”
A Mastercard spokesperson told Cointelegraph that the company works with central banks in all regions where Mastercard operates:
“We are focused on promoting public / private CBDC partnerships in collaboration with fintechs to enable crypto card options for those looking to buy and deposit crypto (in partnership with Evolve Bank & Trust and Paxos Trust Company) while we innovate blockchain and use our partnerships for innovations for the future of the digital asset infrastructure. “
Next Step crypto
According to Jevans, the upcoming acquisition of CipherTrace by Mastercard finally proves the next logical step in bringing cryptocurrencies to the world: “This is the maturation of crypto into the financial payment infrastructure. The core”. He said all major payment companies must acquire or work with crypto intelligence firms to ensure digital asset development; Otherwise there is a risk of failure.
Echoing Jevans, Alex Tapscott, author of Financial Services Revolution: How Blockchain Changes Money, Markets, and Banks, told Cointelegraph that Mastercard’s recent decision to acquire CipherTrace shows that many established companies see the acquisition as an appropriate way to develop their expertise in the industry:
“I wouldn’t be surprised if there would be more such deals in the future. Can incumbents really stay on the sidelines as stablecoins and crypto assets continue to skyrocket in value and spread? Today, the value of stablecoins in circulation exceeds $ 150 billion. When will Mastercard or Visa be introduced? “
Tapscott believes that leading payment providers are now seizing this opportunity and viewing it as a potential threat to their existing businesses. While Mastercard is leading the way in growing digital assets through partnerships with companies like Circle, Gemini, and BitPay, other payment service providers are now doing the same.
For example, in July, Visa announced that its crypto-enabled cards had total spending over $ 1 billion in total spending over $ 1 billion in digital currency at millions of merchants worldwide in the first half of 2021.
Jevans also noted that major exchanges will also begin acquiring or partnering with crypto companies. For example, Deutsche Börse, the operator of Deutsche Börse, recently acquired a majority stake in Crypto Finance AG, a Swiss company for digital assets.
Both Jevans and Tapscott say these acquisitions and partnerships will become the norm as CBDCs, stablecoins and NFTs pour into traditional markets. “I think as payment companies enter this market, we will see more security, privacy, and transaction security around NFTs and other securitized assets. Companies no longer just think about payments, but about the bigger picture, says Jevans.
Education is the key
While it’s worth noting that payment companies are partnering with or acquiring crypto companies to support digital assets, Jevans mentioned that integration can be challenging. Jevans notes that this tends to happen when pairing crypto companies with centralized institutions: “There will be education on both sides.”
However, Jevans says that CipherTrace is ready to help Mastercard employees better understand how cryptocurrencies and digital assets work and how they are integrated into their business models. “It will be a challenge, but also a huge opportunity for both companies,” says Jevans.