US payment giants Visa and Mastercard have reportedly decided to delay plans to form new partnerships with cryptocurrency firms due to the recent challenges in the crypto space, according to sources familiar with the matter as reported by Reuters.
Both Visa and Mastercard have postponed the launch of certain crypto-related products and services, citing an uncertain regulatory environment and a decrease in demand for crypto services until the market's condition improves, the sources said.
The two card companies had previously shown interest in crypto over the past few years, with some even predicting it would be the next big thing in finance. In April 2022, Mastercard partnered with crypto lender Nexo to launch the world's first "crypto-backed" payment card. Meanwhile, Visa had previously partnered with FTX on a global credit card offering before ending its ties with the now-defunct exchange just a month after announcing an expanded partnership.
Despite the enthusiasm shown by these companies towards crypto, the recent string of high-profile collapses, including FTX and Three Arrows Capital, has resulted in a more cautious approach toward investing and potential partnerships in the industry. Sentiments are not expected to pick up until the regulatory environment and market conditions improve.
This news comes amid growing concerns over the volatility and unpredictability of cryptocurrencies, particularly following the recent market crash that saw Bitcoin lose over 40% of its value. Several countries, including China and India, have also moved to ban cryptocurrencies altogether, while others are imposing stricter regulations on the industry.
According to industry experts, the decision by Visa and Mastercard to hold off on forging new partnerships with crypto firms is likely to have a significant impact on the sector, as these companies are some of the largest and most influential players in the payments industry.
However, some analysts also believe that this may be a temporary setback for the industry as crypto continues to gain popularity among younger investors and more companies begin to explore its potential uses.
It remains to be seen how long Visa and Mastercard will hold off on their plans to form new partnerships with crypto firms, but for now, it seems that the industry will have to weather the storm and wait for more favorable conditions before these companies are ready to fully embrace the crypto revolution.
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