In a collaboration with Mastercard, Paxos, a payments giant, has entered into a partnership in order to offer crypto trading for banks. They will also take care of security and compliance.
Mastercard will announce Monday a program called Crypto Source, which will allow banks and other financial institutions to offer cryptocurrency trades.
According to the company, the program will be a “bridge” between Paxos’ crypto trading platform and banks. Mastercard will also handle regulatory compliance and security issues that banks face when offering crypto trading services.
Paxos will handle custody and trading services while Mastercard will integrate these services with banks’ interfaces.
“What we’re announcing today, is a connected approach for services that will help users safely and securely enter the crypto ecosystem,” Ajay Bhalla, Mastercard’s cyber-intelligence president, said in a statement. “Our recent investments, such as the acquisitions of CipherTrace, Ekata and Ekata, provide us with unique capabilities to help our customers and consumers access the most technologically advanced solutions on the market.”
Banks have noticed, with JP Morgan and Goldman Sachs creating teams to cater to institutional investors.
Traditional finance players have so far largely avoided selling their crypto trading services to retail investors.
Mastercard’s move will likely increase competition with exchanges such as Coinbase or FTX. These companies have been on buying sprees in an effort to consolidate crypto after the collapses of large players such as crypto broker Voyager Digital, and crypto lender Celsius Networks.
The increased scrutiny that the crypto winter has attracted from regulators might have been a positive. This will likely lead to a stronger regulatory framework, which can help alleviate the fears of retail investors – particularly if household-name banks facilitate trading.
“We’re thrilled to continue our long-term partnership and Paxos co-innovating to bring secure and safe technology to financial institutions,” stated the chief digital officer of Mastercard Jorn Lamp. Our innovative crypto products will offer choice at scale and continue offering unique opportunities to financial institutions in their quest to provide advanced services to customers.
Mastercard and Visa have both made recent moves in crypto payments, with Visa’s partnership with NFTs, the former with Coinbase, and the latter’s ink-up on FTX crypto debit cards.