Mastercard Inc. has launched a service that allows consumers to buy and sell digital assets through their bank accounts.
Mastercard Inc. has launched a service that allows consumers to buy and sell digital assets through their bank accounts, paving the way for potentially thousands of financial institutions to offer crypto transactions for the first time.
Ajay Bhalla, president of Cyber and Intelligence at Mastercard, said in an interview that a product called Crypto Source will be launched in the US, Israel and Brazil early next year through a pilot program. He declined to comment on which bank will be involved first.
Banks have been warming up for cryptocurrencies over the past few years, but the majority have avoided holding and offering virtual currencies to retail customers due to regulatory concerns. However, Mastercard’s services, along with thousands of banking partners, can help bring cryptocurrencies into mainstream adoption.
Bhalla said, “Being able to buy cryptocurrency from their own bank with a bank account is a very big demand in the market and what consumers want.”
Crypto Source is powered by a partnership with Paxos Trust Co., a digital asset company that will provide virtual currency trading and custody services on behalf of banks. This means that the lender will not hold the assets on the balance sheet.
The bankruptcy of the cryptocurrency market has triggered a series of bankruptcies, layoffs and failures in the sector. The crash has removed nearly $2 trillion from the market value of cryptocurrencies, but has not yet stopped large financial firms from offering products and services in this space. For example, late last month, exchange operator Nasdaq Inc. said it would start offering digital asset custody services to customers.
This new product is just Mastercard’s latest entry into cryptocurrency. The company said in February that it will hire more than 500 people this year as it expands its data and services division.
Last year, the New York-based Purchase-based company struck a deal with Bakkt to make it easier for banks to offer cryptocurrency rewards to credit and debit cards. Mastercard has also begun allowing startups focused on cryptocurrencies and digital assets to participate in the Startup Path program. The program gives startups access to the network’s executives and skills to help them grow.