Mastercard, one of the world's top two payments companies alongside Visa, has announced that it will start to directly accept cryptocurrencies on its network during 2021. As part of the announcement made by Raj Dhamodharan, Executive Vice President of Digital Asset & Blockchain Products & Partnerships at Mastercard, the company has said that it has not yet decided which cryptocurrencies it will be allowing on its payments network directly.
Dhamodharan further makes the point that for Mastercard, it's all about providing their customers choice as already, they are using their network to buy cryptocurrencies and convert them to other currencies.
"We are preparing right now for the future of crypto and payments, announcing that this year Mastercard will start supporting select cryptocurrencies directly on our network. This is a big change that will require a lot of work. We will be very thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protections and compliance. Our philosophy on cryptocurrencies is straightforward: It’s about choice. Mastercard isn’t here to recommend you start using cryptocurrencies. But we are here to enable customers, merchants and businesses to move digital value – traditional or crypto – however they want. It should be your choice, it’s your money," wrote Dhamodharan.
The announcement by Mastercard comes at a time when cryptocurrencies, especially Bitcoin, have been reaching all-time highs on their prices. Recently, Bitcoin crossed both the $40,000 and $44,000 marks on the back of news that Elon Musk's Tesla bought $1,5 billion worth of Bitcoin.
This signaled the first time a listed and popular company made a huge bet on Bitcoin on its balance as opposed to the US dollar.
However, as Dhamodharan mentions, not all cryptocurrencies will be accepted on the Mastercard network as the company will apply some criteria to determine which ones would be suitable.
"To be completely clear, not all of today’s cryptocurrencies will be supported on our network. While stablecoins are more regulated and reliable than in the recent past, many of the hundreds of digital assets in circulation still need to tighten their compliance measures, so they won’t meet our requirements. We expect consumers and the ecosystem as a whole will start to rally around the crypto assets that offer reliability and security. It’s those very same stablecoins that we expect to bring into our network."
Mastercard will be looking for cryptocurrencies that meet what they have listed as four key items. These a re namely:
- Consumer protections that include privacy and security of consumers’ information.
- Adhering to strict compliance protocols including Know Your Customer (KYC).
- Follow local laws and regulations wherever the cryptocurrency is used.
- Offer the stability people need in a vehicle for spending (payments), not investment.
Looking at Mastercard's criteria for accepting cryptocurrencies on its network, it remains to be seen which ones will pass the four key items test, especially when considering that Bitcoin is generally being hoarded as an investment and a store of value.
From a consumer perspective, it will purely be about having an alternative currency of your choice to make payments in.
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