Mastercard’s new program helps banks offer crypto trading.
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I see accredited people.
Mastercard crashed the crypto party this week when it announced a program to help financial institutions offer crypto trading. It’s the latest push from payments processors to bring traditional, “centralized” finance giants into the crypto space—and for blockchain fundamentalists, they’re unwelcome guests.
- Visa teamed up with crypto exchange FTX last week to roll out crypto debit cards in 40 countries.
This big bank invasion is a vibe killer for crypto enthusiasts who want to keep the space as “decentralized” as possible. Operating independently of centralized institutions—including banks that handle transactions—is literally in many definitions of both “cryptocurrency” and “blockchain.” And an entire sub sector has sprung up to defend this ideal vision, called decentralized finance (DeFi).
In fact, bitcoin, the first cryptocurrency, was created in reaction to the mass failure of banks during the 2008 financial crisis. Its original purpose was to facilitate internet transactions without involving banks or other financial intermediaries.
That’s all to say that using a crypto-loaded Visa to shop the Reformation sale online is like eating soup with a lollipop. It works, sure, but it’s kinda weird.
Then there’s the ice cream soup of arguments
Skeptics argue that the fully decentralized dream is about as realistic as good-tasting candy corn (don’t @ me), and that getting major financial institutions involved is key to crypto going Ed Sheeran-level mainstream.
These TradFi (traditional finance) believers have gotten louder over the past year, as crypto’s version of a recession, a “crypto winter,” has set in. Major cryptocurrencies’ prices are way down from their 2021 peaks, while high-profile crypto companies have made layoffs, filed for bankruptcy, and straight-up collapsed. “That volatility is what will drive consumers to feel safer with established financial institutions,” Melody Brue, a fintech analyst at Moor Insights & Strategy, told Protocol.
Looking ahead…If banks do decide to take advantage of Mastercard’s crypto integrations, they’ll be going head-to-head with crypto exchanges like Coinbase.—JW
*Note: A previous version of the story incorrectly stated that American Express has been plotting a move into stablecoins. That sentence has been removed.
