The good news seems to follow one another for cryptocurrencies, whose bull market now looks furiously like that of 2017. Yesterday, MasterCard announced that it will facilitate crypto payments. But this news should be put into perspective, given that the cryptos adopted by the bank card giant will be limited to… stable tokens. In any case at first.
MasterCard: “It’s a matter of choice”
Payments company executive vice president Raj Dhamodharan said, “ It’s about freedom of choice. MasterCard is not intended to advise you to start using cryptocurrencies. But we’re here to make it easier for customers, stores and businesses to choose to migrate to digital values. “
MasterCard has not cited the tokens that will be supported. She nevertheless specified that they will have to meet 4 strict criteria:
- Robust consumer protection (security and privacy)
- Strict adherence to KYC rules
- Compliance with local laws and regulations
- Stability as a means of payment
This narrows the list down to a few stable tokens like USD Coin (USDC), Paxos Standard (PAX), and Gemini Dollar (GUSD). It’s hard to see MasterCard supporting Tether as it stands.
Limited interest, but an encouraging first step
Being able to pay in stable tokens with your MasterCard is of limited interest. When you have crypto, it is for one or more of the following reasons:
- Fear of devaluation of paper currencies
- Be your own bank (decentralization)
- No counterparty risk
- Transactions without permission
With the stable token / MasterCard combo, you do not benefit from any of the advantages mentioned above. MasterCard is by definition a centralized entity, so it can block certain transactions. The same can be said of stable tokens, which are managed by companies or consortia. The value of stable tokens is backed by paper currencies, so they are exposed to the risk of devaluation, like these. You are not really your own bank, as you have to rely on the reliability of the stable token issuer to guarantee its value. This generates a counterparty risk. Of course, these companies are audited. But the Wirecard scandal shows that zero risk does not exist.
That said, this is an encouraging first step that could open Pandora’s Box. Namely MasterCard’s native support for real cryptocurrencies. So this is good news in itself. But while waiting for this development, there is nothing to be overly excited about either. In any case, there are MasterCard crypto cards issued by FinTech companies (Wirex, BitPay) that allow you to really pay in crypto currencies.