Oct. 26, 2022
One more step towards widespread crypto adoption has just been taken.
Payments giant Mastercard (NYSE: MA) recently announced a program called Crypto Source that will assist financial institutions in offering cryptocurrency trading.
They are working with Paxos Trust – a popular crypto trading platform that Paypal (NASDAQ: PYPL) already utilizes. Founded all the way back in 2012, Paxos was the first crypto exchange to be licensed by the New York State Department of Financial Services.
I’ve written before about them and their Pax Gold ($PAXG) product — a digital token backed by physical gold that allows traders to buy, sell and hold the equivalent of real gold bullion without having to store the physical asset. Each PAXG token is backed by one fine troy ounce of a 400-ounce London Good Delivery gold bar, stored in Brinks’ vaults. It’s the real deal.
Banks are scared to dive into cryptocurrencies due to the complex and ever-changing regulatory environment, not to mention the many scams that exist in the space.
By working with Paxos, Mastercard will be able to handle all regulatory compliance and security. By doing this, they hope to assuage any fears financial institutions have about offering crypto services.
The demand for it is there.
People are increasingly interested in dipping their feet into the crypto space, but many feel uncomfortable doing so because crypto is the Wild West of finance.
After polling their customers, Mastercard discovered that 60% of respondents wanted to try out crypto through their banks but simply feel overwhelmed by the prospect of diving headfirst into a complex world that they don’t fully understand.
Even in the midst of a “crypto winter,” adoption is growing. And it’s only a matter of time before we get more regulatory clarity in the space – which will accelerate this trend even more.
And this isn’t Mastercard’s first foray into the blockchain world.
Back in June, they partnered with Coinbase to enable direct payments. And later, they issued a debit card that users could customize with their own NFT avatars.
Not to be outdone, Visa (NYSE: V) recently jumped into the space as well. They’ve just partnered with popular exchange FTX to offer crypto debit cards in 40 countries. And American Express (NYSE: AXP) has announced its interest in using stablecoins on its network.
It’s somewhat ironic that even though cryptocurrencies were created to circumvent banks and middlemen, their widespread adoption will depend on institutional acceptance. Smart people in traditional finance realize that “if you can’t beat em, join em” is the motto to embrace.
Even though the largest investment banks are savvy enough to have dedicated crypto branches, few of them offer any services to their customers. Recently, JPMorgan (NYSE: JPM) CEO Jamie Dimon called cryptocurrencies “decentralized Ponzis.” Certainly, many of them are, but to categorize the entire industry as a Ponzi scheme is disingenuous at best.
One must assume that people like Jamie Dimon have ulterior motives for disparaging the industry.
The truth is… the banks are hurting. JPMorgan Chase’s stock recently hit 52-week lows. The banking industry is frightened of disruption. The Stablecoin Transparency Act is getting closer and closer to being passed. And when it does, it threatens these banks’ revenue sources. I’m talking about all the fees generated from slow and inefficient ACH and wire transfers.
If international payments and money transfers can occur quickly and at a fraction of their current cost using stablecoins, banks like JPMorgan Chase stand to lose in a big way.
These institutions know that mainstream adoption is inevitable.
I, for one, won’t let the opinions of the entrenched financial elites prevent me from profiting. And neither should you.