Major card providers like Visa and Mastercard have put a freeze on further crypto initiatives for the near term. Reasons for the shift can be attributed to high-profile failures like FTX, waning consumer interest, as well as regulatory scrutiny and uncertainty.
At the time of writing, it would seem that current offerings are still available, like Visa cards from Binance, Coinbase, and Crypto.com, with new offerings simply on hold for the time being.
"Recent high-profile failures in the crypto sector are an important reminder that we have a long way to go before crypto becomes a part of mainstream payments and financial services," a spokesperson for Visa said to Reuters, adding "however, this does not change the company's crypto strategy and focus."
With large platforms like FTX, BlockFi, Celsius, and Genesis filing for bankruptcy, consumer confidence in cryptocurrency managed by third parties is beginning to falter, and in turn the interest in cards offered through these types of platforms.
One representative from American Express shared that the financial service company doesn't see crypto replacing its core payment and lending services any time soon but that the company is continuing to explore meaningful use cases for blockchain technology.
Part of the reason these offerings can not currently compete with their traditional counterparts, particularly in the U.S., is due to both regulatory uncertainty and scrutiny. Regulators can not seem to decide who will take lead, though the two at the top of the running appear to be the CFTC and SEC.
However, one of the major issues plaguing a concise regulatory policy is first the identification of the assets themselves, with the SEC lobbying for all cryptocurrencies outside of Bitcoin to be labeled as securities.
According to Thomas Hayes, chairman and managing member at investment firm Great Hill Capital, companies like Visa and Mastercard cannot and should not move ahead until there is a clear regulatory framework.
He explained that "delays are not attributable to their core business - as that remains strong. They are related to an uncertain regulatory environment for crypto and demand/interest for crypto services declining in the near term."
While card providers do recognize the benefits of the underlying blockchain technology, it seems that in the U.S. they will need to wait out both market and regulatory uncertainty, and are proceeding with caution until these areas advance and recover.
In other news, Coinbase says Binance USD doesn’t meet its standards and will soon delist.
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