Visa includes USD Coin cryptocurrency in its payment network
Visa is launching a pilot program with the Crypto.com platform to integrate the USD Coin stablecoin into its payment network. The objective is to eliminate the conversion of cryptocurrency into fiat money, an essential step in the use of crypto bank cards. PayPal and then Mastercard have made similar announcements in recent months.
Visa announced on Monday, March 29, in a press release the support for the cryptocurrency USD Coin (USDC) on its payment network. For now, this is a pilot program. It will be fully deployed if successful.
For the payment giant, this novelty "marks an important step forward for its strategy aimed at facilitating all forms of money flow". The goal: "to make cryptocurrencies more secure, useful and applicable to payment," Visa writes in its press release.
A CRYPTOCURRENCY BACKED TO THE AMERICAN DOLLAR
The USDC is what is called a stablecoin, that is, a cryptocurrency whose value is guaranteed by another asset, in this case the US dollar. Offered by the Circle company and backed by Ethereum, it aims to solve some problems with traditional cryptocurrencies, such as volatility and conversion fees.
This announcement is part of a partnership forged with the Crypto.com platform, which offers its users a bank account and a bank card in fiat or cryptocurrency. Visa is responsible for the conversion at the time of payment.
FLUIDIFY THE FIAT CURRENCY CONVERSION
In practice, if a customer chooses to use a Crypto.com Visa card to pay, the digital currency held in the wallet must be converted to traditional currency (fiat). This step generates additional costs. It's this barrier that Visa seeks to remove with consideration directly on its USDC payment network, thanks in part to its collaboration with digital asset bank Anchorage.
Mastercard has already passed the pilot project stage since it announced on February 11 that it will allow merchants to accept cryptocurrency payments directly through its payment network during the year 2021. The assets that will be taken in charge have not yet been specified.
PayPal made a similar announcement last October. Since November 12, all American users of the online payment service have access to the cryptocurrency payment service at the 26 million merchants in the network.
LEGAL VACUUMS THAT ARE CONCERNING
Although stablecoins are less of a concern than more volatile cryptocurrencies, the authorities are still calling for better supervision. A year ago, in April 2020, the Financial Stability Board (FSB), a coordinating body of the G20, published a set of recommendations on stablecoins. He noted that "the ease with which stablecoins can operate across borders (…) calls into question the effectiveness of regulation, control and oversight at the jurisdictional level".
The European Union is also working on the subject. Last September, the Commission proposed new legislation on "crypto-assets". In particular, it provides that issuers of stablecoins will be supervised by the European Banking Authority. Because "these instruments are likely to present significant risks for financial stability and consumer protection in many Member States", wrote the European executive.
