- Following the meltdown of major crypto firms during last year’s bear market, the tradFi bullish on crypto have been forced to rethink their strategies.
- Also at play is the increasing policy tightening by the regulators and lawmakers.
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Global payment processing multinational firms Visa and MasterCard are planning to pause their blockchain projects, including forging new partnerships with crypto companies, following last year’s market volatility, which was characterized by the collapse of major digital asset firms.
According to unidentified sources who shared information with Reuters, the two firms would only engage in crypto projects once the market conditions improve and the regulatory environment stabilizes.
“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,” said a representative from Visa, adding that the firm’s strategy regarding blockchain is intact despite the step.
Both Visa and MasterCard have been bullish on blockchain technology and cryptos, establishing partnerships with several companies in the sector. For instance, the firms have partnered with Binance for crypto-fiat-linked payment cards.
Some of their partners are bankrupt or facing regulatory headwinds
Most of the crypto companies Visa and MasterCard have collaborated with in the past, including Binance, Paxos, and FTX, are under probe by the regulators or bankrupt. Binance, for example, is being investigated by the SEC, the Department of Justice, and the Internal Revenue Service. According to industry experts, the development is the right one considering the uncertain regulatory environment.
Thomas Hayes, the chairman and managing member at Great Hill Capital, remarked that traditional financial corporations “cannot and should not move ahead until there is a clear regulatory framework. Delays are not attributable to their core business – as that remains strong. They are related to an uncertain regulatory environment and demand or interest for crypto services declining in the near term.”At the same time, Visa’s head of product, Cuy Sheffield, has dismissed the report terming it inaccurate. According to the executive, Visa will continue establishing partnerships across the crypto space to enhance fiat and off-ramp services for stablecoin payments. Sheffield maintains that despite the challenges in the sector – volatility and the heavy-handed regulations – cryptocurrencies based on a public blockchain are important for a perfect payment ecosystem.
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