Shoppers using a Mastercard will soon be able to pay for their purchases with a select list of cryptocurrencies, another sign that digital assets are going mainstream. The announcement was made in a blog post by Raj Dhamodharan, Mastercard’s vice president for blockchain and digital assets.
“We are preparing right now for the future of crypto and payments, announcing that this year Mastercard will start supporting select cryptocurrencies directly on our network,” he wrote. “This is a big change that will require a lot of work. We will be very thoughtful about which assets we support based on our principles for digital currencies, which focus on consumer protections and compliance.”
That means a consumer making a credit card purchase could pay their monthly bill with an approved cryptocurrency instead of dollars. The move could be part of an emerging trend. PayPal and Square have recently made similar announcements.
Mastercard’s move also comes in the wake of huge increases in the value of Bitcoin, which hit $40,000 in value per coin earlier this month. That surge followed Tesla’s announcement that the company had purchased $1.5 billion in the digital currency.
Stock trading guru Jim Cramer said last week that he has replaced his cash reserves with bitcoins, noting that “cash earns nothing” while bitcoin can increase in value. That said, it can also lose value since the digital asset has been extremely volatile over the last few years.
Mastercard has not yet said which digital assets it will accept. What is clear is that not all will make the cut.
“While stablecoins are more regulated and reliable than in the recent past, many of the hundreds of digital assets in circulation still need to tighten their compliance measures, so they won’t meet our requirements,” Dhamodharan wrote. “We expect consumers and the ecosystem as a whole will start to rally around the crypto assets that offer reliability and security. It’s those very same stablecoins that we expect to bring into our network.”
Mastercard said there are four things that it will consider when compiling a list of acceptable digital currencies. They include:
Consumer protections, including privacy and security of consumers’ information -- the same level of security people have come to expect in their credit cards.
Strict compliance protocols will be needed, including Know Your Customer, a requirement meant to snuff out illegal activity and deception in payment networks.
The digital assets must follow local laws and regulations in the regions they are used.
The asset must have a high degree of consumer acceptance.
A major hurdle for cryptocurrencies to gain widespread approval is the fact that transactions can be anonymous. Law enforcement agencies have warned that this can allow digital assets to be used for money laundering.