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Visa and Mastercard halt crypto push amidst industry breakdown

Visa (V.N) and Mastercard (MA.N) are halting efforts to develop new relationships with crypto firms after a series of high-profile breakdowns damaged confidence in the industry, according to sources familiar with the subject cited by Reuters.

In 2022, the crypto business had a spectacular turnaround of fortune as the bankruptcies of industry giants FTX and BlockFi shook investors and intensified regulatory scrutiny of the sector.

Visa and Mastercard have decided to delay the launch of certain crypto-related products and services until market circumstances and the regulatory environment improve, according to persons who requested anonymity because the discussions were private.

"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 Visa spokeswoman stated.

The company's crypto strategy and emphasis remain unchanged, the representative noted.

Mastercard's representative stated, "Our efforts continue to focus on the underlying blockchain technology and how that can be applied to help address current pain points and build more efficient systems."

In the past couple of years, prominent credit card companies have warmed up to cryptocurrencies as the asset class's popularity has skyrocketed, with some touting it as the future of finance.

Card companies, who collect a small fraction of the monetary worth of transactions they process, had announced various agreements with crypto startups and formed teams to investigate blockchain technology.

Mastercard partnered with cryptocurrency lender Nexo in April to produce the world's first "crypto-backed" payment card.

Visa terminated its global credit card arrangements with FTX in November, less than a month after announcing an expansion of its collaboration with the exchange.

American Express (AXP.N) announced in 2021 that it would investigate crypto as a future redemption option for reward points.

However, it does not consider crypto tokens as a strategic priority in the near future, according to a source with knowledge of the topic.

"In the near-term, we don’t see crypto replacing our core payment and lending services," an AmEx spokesperson said in an emailed statement, adding that the business continues to investigate the technology's applications.

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

"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."


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