For a very good reason, Banks have notoriously been steadfast in their opposition to cryptocurrencies. The current financial monopoly held by banks and other financial institutions is directy threatened by the peer-to-peer economic marketplace of digital currencies. When an executive at Mastercard said that the credit card issuer was open to the overall use of cryptocurrency, it took many by surprise. However, there is a major catch to this announcement.
Mastercard is not exactly a fan of virtual currencies like Bitcoin even though they have put a lot of time and effort into blockchain technology. Cryptocurrency was classified as a cash advance instead of a purchase by Mastercard and Visa.
As a result, using credit cards to buy Bitcoin and other cryptocurrencies became more expensive and users began accruing interest from the moment they used a card while exchanges charged a higher fee.
The reality is that the fintech giant is not compatible to cryptocurrencies even if it appears that the financial juggernaut has now changed their tune. As long as the virtual currencies are issued by central banks, Mastercard executive Ari Sarker says that the company is “very happy” to consider helping the use of cryptocurrencies.
At present, a pilot program is being run in Japan and Singapore by Mastercard. Bitcoin and other cryptocurrencies may be used to cash onto the cards by customers. Interestingly, the program is not a crypto trading one and that strict controls, such as anti-money laundering and KYC, are in place, says Sarker.
Mastercard taking this action comes as no surprise. The vast amount of revenue flowing through the crypto sphere is making banks to get their fair share of the same. At the same tine, they want to exercise full control. This is why they are only willing to support cryptocurrencies which are issued by Central Banks.