Credit card company Visa has completed its about-turn on Bitcoin with the reveal of its crypto payments service for banks. Source: AFP
- Credit card company Visa has completed its about-turn on Bitcoin with the reveal of its crypto payments service for banks
- Visa’s new APIs will allow banks and other traditional financial outlets to enable their users to make and receive Bitcoin transactions, among other cryptocurrencies
- Visa’s new stand, along with the support of PayPal and institutional investors, signals a tremendous change in acceptance and policy from traditional finance towards the developing digital assets
Visa, a former staunch enemy of the burgeoning cryptocurrencies market, is completing its turnaround into a Bitcoin supporter – the long-established payments giant has revealed plans to help banks roll out cryptocurrency buying and trading services with a Visa crypto software program, set to launch later this year.
Visa’s announcement comes after a year of institutional and other traditional investors finally coming aboard the crypto as a digital currency bandwagon, buoyed by bullish performances by Bitcoin and the crypto market as a whole towards the middle of 2020.
Not surprisingly, governments and players in the existing banking system are unwelcoming of payment networks that are “powered by users with no central authority or middlemen.” Many fear that cryptocurrencies like Bitcoin can be used to circumvent capital controls, and can be used for money laundering or illegal purchases.
But wide-scale adoption of crypto also has the potential to render certain traditional finance channels irrelevant, especially if the valuations in the volatile crypto market stabilize. Why would one store their funds in banks with hefty interest rates, for instance, if a stable crypto coin can store value for minimal charges, yet with the potential to gain even more?
That development, if it ever happens, is still far off on the horizon. But the interest from traditional financial services and investment groups to invest in the crypto market, along with calls to formally regulate the space, appear to step in a more fruitful direction.
Over the past year, hedge funds and various institutional investors have changed their tune about Bitcoin and the crypto market in general, now pouring in billions and sending the prices of certain coins skyrocketing. It is an attractive time to be a cryptocurrency trader once again after the initial market boom in 2017-2018, but Visa has actually been quietly working on its crypto software services for some time.
The credit card firm has been partnering with 35 various bitcoin and cryptocurrency platforms in recent years, and the company is finally ready to roll out Bitcoin and cryptocurrency buying and trading services that are intended to help banks, the traditional bastion of finance, ease into onboarding crypto transactions and trades.
A US bank in Kansas will be the first to pilot the Visa APIs, which will help the card issuer’s bank clients integrate Bitcoin and certain other cryptocurrencies. It’s understood banks will be able to allow their users to withdraw and self-custody their crypto holdings, a departure from Visa rival PayPal, which also joined the crypto acceptance train late but drew criticism for preventing people from moving their holdings off its platform.
The price of Bitcoin and other notable cryptos like Ethereum have surged of late thanks to the support of institutional investors and PayPal, drawing global attention once again. But Bitcoin’s growing popularity among investors as a speculative asset and a hedge against inflation has reduced its perceived utility as an alternative payment method.
“We see crypto assets as more like digital gold,” Visa’s head of crypto, Cuy Sheffield, told Forbes over the phone. “There’s less demand to spend Bitcoin.”
His comments on “digital gold” echo those of Visa chief executive Al Kelly, indicating the card company as a whole view Bitcoin and possibly all crypto assets more for their function as a store of value, rather than as a form of payment.
Kelly also pointed out that digital currency exchanges and platforms like Crypto.com, BlockFi, and BitPanda have begun issuing Visa cards, telling a Q1 2021 earnings call that “Our strategy here is to work with wallets and exchanges to enable users to purchase these currencies using their Visa credentials or to cash out onto our Visa credential to make a fiat purchase at any of the 70 million merchants where Visa is accepted globally.”
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February 04, 2021 at 10:29PM
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Is Visa's crypto roadmap a breakthrough for traditional finance? - TechHQ
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