Visa, Mastercard pause crypto push in wake of industry meltdown – sources

Feb 28 (Reuters) - Visa, the US payments giant (VN) and Mastercard (MAN) are halting plans to forge new partnerships with crypto firms after a series of high-profile crashes shook faith in the industry, people familiar with the matter told Reuters.

The cryptocurrency industry experienced a surprising turnaround in fortunes in 2022, as the bankruptcies of industry bigs FTX and BlockFi unsettled investors and increased regulatory scrutiny of the sector.

Both Visa and Mastercard have decided to delay the launch of certain cryptocurrency-related products and services until market conditions and the regulatory environment improve, said the people, who asked not to be named because the talks were confidential.

“The recent high-profile failures in the cryptocurrency sector are an important reminder that we have a long way to go before cryptocurrencies become part of mainstream financial services and payments,” said a Visa spokesperson, the largest payment processor in the world.

However, that does not change the company's crypto strategy and approach, the spokesperson added.

A Mastercard spokesperson said: "Our efforts continue to focus on the underlying blockchain technology and how it can be applied to help address current pain points and build more efficient systems."

CRYPTO WITHDRAWAL

Over the past two years, major card firms have been getting excited about cryptocurrency as the asset class's popularity has exploded, with some touting it as the next big thing in finance.

The card companies, which pocket a small percentage of the dollar value of the transactions they process, had announced multiple partnerships with cryptocurrency firms and established dedicated teams to explore blockchain technology.

MasterCard United with crypto lender Nexo in April to launch what it called the world's first "crypto-backed" payment card.

In November, Visa chopped up its global credit card deals with FTX, just one month after announcing an expanded partnership with the exchange.

American Express Card Company (AXP.N) saying in 2021 I would consider using cryptocurrency as a possible option to redeem rewards points in the future.

But it is not viewing crypto tokens as a short-term strategic priority, a source familiar with the matter said.

“In the short term, we do not see cryptocurrencies replacing our basic payment and lending services,” an AmEx spokesperson said in an emailed statement, adding that the company continues to explore significant use cases for the technology.

"They cannot and should not move forward until there is a clear regulatory framework," said Thomas Hayes, president and managing member of investment firm Great Hill Capital.

“The delays are not attributable to its core business as it remains strong. They are related to an uncertain regulatory environment for cryptocurrencies and declining demand/interest for cryptocurrency services in the near term.”

Reporting by Manya Saini in Bangalore; Edited by Sweta Singh and Saumyadeb Chakrabarty

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