According to a Reuters report, American multinational financial services firms Mastercard and Visa have halted plans to establish new partnerships with crypto businesses.
This pause is tied to instances of high-profile failures in the past year. As key players FTX and BlockFi declared bankruptcy in 2022, investors were shaken, and regulatory scrutiny on the crypto industry tightened.
Those familiar with the matter said Mastercard and Visa had decided to delay the release of some crypto-related products and services until market circumstances and the regulatory structure improve.
A Mastercard representative told Reuters that the company would still focus on the underlying blockchain technology and how it may alleviate “current pain points” and design more efficient operating models.
1/ This story is inaccurate as it pertains to Visa, here’s the reality 👇🏼https://t.co/oAEaj7MsX0
— Cuy Sheffield (@cuysheffield) February 28, 2023
A Visa spokesperson, meanwhile, said the recent high-profile failures in the crypto sector serve as a reminder that there is still a long way to go before crypto becomes a part of conventional payments and financial services. However, the spokesperson added that the company’s crypto strategy and focus would remain unchanged.
After crypto soared in popularity in the previous few years, the attitudes of major credit card companies regarding the asset class began to shift, with some expecting that it would be the next great thing in finance.
Card companies raced to sign various agreements with crypto firms and formed dedicated teams to study blockchain technology. However, crypto tokens are currently seen as something other than a strategic priority.
In an emailed statement, an American Express spokesperson said the firm does not see cryptocurrency replacing its main payment and lending businesses soon.
Thomas J. Hayes, chairman and managing member of Great Hill Capital, explained that these businesses should only proceed with their crypto push once a clear legal framework is in place.
Hayes emphasised that the delays are tied to “an uncertain regulatory environment” for crypto and a decline in interest in crypto services among investors.