Powered By:

Seward-and-Kissel

Major card networks Visa and Mastercard continue to seek opportunities related to digital currencies, signaling the potential acceptance of blockchain as a means of mainstream global payments in the coming years.

On an April 27 earnings call, Visa announced that it is working to develop a policy for central bank digital currency (CBDC) and is promoting the concept of public-private partnerships in that area. Mastercard made similar statements two days later on its own earnings call.

Visa stated that it sees five crypto use cases: allowing consumers to make purchases in Bitcoin; enabling conversions from crypto to fiat currencies; developing application programming interfaces (APIs) for financial institutions; handling the settlement of crypto-related transactions; and working with central banks to develop digital currencies. For example, Visa announced recently that it was the first network to settle transactions in USD Coin (USDC), a stablecoin pegged to the U.S. dollar.

For its part, Mastercard announced on April 27 a cryptocurrency rewards credit card in a partnership with WebBank and Gemini, the cryptocurrency exchange. During its earnings call, Mastercard also discussed its work in CBDCs through its partnership with the Central Bank of the Bahamas and Island Pay, linking a prepaid card to the Bahama’s Sand Dollar, a digital version of the Bahamian dollar.

LEGAL TOKENS

While the opportunities seem abundant for the card networks, there are a few obstacles to seeing the blockchain and digital currencies become commonplace as a way to pay for goods and services. For one, digital currencies are still treated as property for U.S. tax purposes, which means that any transaction using them has tax consequences. That brings their practicality into question – though that is a concern that stablecoins can help alleviate since, by definition, their value is stable. Moreover, there is the thorny issue of error resolutions within the crypto ecosystem. But with government interest and cooperation, the networks seem to be betting on evolution that makes crypto purchases a practical, everyday tool.

SUBSCRIBE TO SKRYPTO

Fill out the following form to receive our cryptocurrency news and analysis.

Author's Assets

SK_Jennings_Headshot

Casey Jennings | Associate

A member of Seward & Kissel’s Financial Services Regulatory Group and Blockchain and Cryptocurrency Group, Casey advises financial services companies – including banks, broker-dealers, investment funds, service providers, and financial technology companies – on federal and state banking and securities law issues and the structuring of new financial products, including anti-money laundering, deposit issues, token offerings, custody of traditional and crypto assets, transfer and liquidity issues, Volcker Rule issues, and investments in crypto assets by funds and other investors. Before joining the firm, Casey served as counsel to the Consumer Financial Protection Bureau, where he developed and implemented financial regulatory policy, including the first CFPB rulemaking to rely on unfair, deceptive, and abusive acts and practices (UDAAPs) authority. Since then, he has:

  • Represented e-retailer APMEX Inc. and alternative asset manager Sprott Inc. in connection with the launch of the online marketplace, OneGold.com.

“The whole notion of crypto is that there are no gatekeepers and the BSA requires that there be gatekeepers. Those two notions are very much at odds with one another. But the BSA is the best system that we’ve got right now.”

Casey’s perspective on crypto AML regulations as published in Cointelegraph article “How U.S. authorities are using old AML tools to crack down on crypto”