As recently as this spring, Visa made the official announcement that it would start accepting payments directly in USD coin. The news was made public right after Mastercard, the competitor company, said that it will soon begin facilitating cryptocurrency transactions. For those who don’t know yet, the USD Coin is a stablecoin that’s connected to the US dollar. This means that 1 USD Coin equals $1.
These announcements are extremely interesting in the actual context of cryptocurrency popularization.
More on the Visa crypto announcement
This recent announcement from Visa did not come from the void. In fact, the company has been planning for years to partner with Crypto.com and create a crypto-based rewards debit card. The problem was that all these transactions needed to be converted into fiat by Crypto.com. This entire process was way too costly and complicated to be done on a daily basis. In 2019, Visa came up with the idea to allow digital currency settlements over a blockchain with the help of Anchorage. This is the first digital asset bank that has been chartered by the Federal Government.
Now, two years later, Visa is finally completing this plan using USD Coin. This type of stablecoin is powered by the Ethereum network but it has the value of $1, therefore making it more stable.
When it comes to future plans, Visa claims that it doesn’t plan on stopping at USD Coin. The company wants to add more stablecoins to its network. The most ambitious plan it has is to start supporting central bank digital currencies or CBDC when they will become available. Some countries are already developing their own CBDC systems while others are still analyzing the concept.
About the Mastercard crypto plan
When it comes to the Mastercard crypto plan, the announcement revealed that the company is going to add cryptocurrencies to its network very soon. However, only those cryptocurrencies that meet certain requirements would be accepted. For example, they will need to be compliant with money laundering laws, to be stable, and private. The biggest problem here is that only a few types of crypto meet these requirements.
The decentralized nature of cryptocurrencies, let’s say Bitcoin, for example, make it incredibly hard for institutions to actually use them. These financial bodies need to be compliant with certain laws and to offer consumer protections. It’s worth noting that there are certain companies that already allow payments to be done using crypto over the Mastercard network.
However, the problem is that if someone wants to receive a crypto payment, they would have to turn the fiat currency into BTC. This is done by paying a fee. Now, Mastercard is saying that users will soon be able to do this natively for certain types of crypto.
As for what types of crypto could make the cut, Bitcoin is definitely out of the question for reasons we have already mentioned. USDC could be one of the few crypto types to fit Mastercard’s idea. It remains to be seen what will the company do and what will actually happen with this whole Visa crypto/Mastercard crypto deal.
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