Financial services giants Visa and Mastercard have shown an increased interest in the trillion-dollar digital payment sector through their recent acquisitions of innovative fintechs.
In January this year, Visa acquired fintech firm Plaid for $5.3 billion. The San Francisco-based firm enables data sharing of financial information between different fintech apps like Venmo and Chime, supporting over 2,000 financial institutions. As such, the acquisition could strengthen Plaid’s global wire transfer capabilities.
Mastercard has also made some major fintech acquisitions. In June this year, the payment giant announced plans to acquire financial data aggregation startup Finicity for $825 million. Mastercard’s announcement states that the addition of Finicity’s technology will strengthen the firm’s open banking platform, providing customers with more options in financial services.
Alex Tapscott, author of the book Financial Services Revolution, told Cointelegraph that Visa and Mastercard have benefited enormously from the steady migration from cash to digital payments, a notion that has been heightened by the COVID-19 pandemic:
“This has been accelerated by the increase in spending online which has been turbocharged by the pandemic. So naturally, it makes sense for Visa and Mastercard to acquire businesses like Plaid (which was pre-pandemic) to defend their dominant position by providing them greater insight into consumer spending habits.”
While both Visa and Mastercard have been focused on traditional payment startups, it’s interesting that these financial services giants are also showing interest in the crypto space. According to Tapscott, this shouldn’t come as a surprise, as he noted that the future of finance in crypto assets is starting to catch on. “I believe Visa and Mastercard also recognize that the future of finance isn’t the ‘digital wallpaper’ of traditional fintechs but deep structural change enabled by crypto assets,” he said.
Additionally, financial services giants may be laying the groundwork for the future of crypto adoption. For example, Visa recently formed a partnership through its Fast Track program with a Bitcoin Lightning startup called LastBit that enables payment in U.S. dollars using Bitcoin (BTC).
Prashanth Balasubramanian, CEO and founder of LastBit, told Cointelegraph that the project was created with the goal of putting Bitcoin in the hands of as many people as possible. He noted that partnering with incumbents like Visa is imperative for the company to achieve this:
“We realize that the FinTech space is highly regulated, technical and complex with high barriers of entry not just from a capital perspective but also from a business perspective. Visa’s expertise here helps us overcome these barriers and bring to life our vision in a manner we possibly couldn’t do single handedly.”
According to Balasubramanian, LastBit spent about six months seeking a bank that would allow the startup to open a corporate account for depositing fiat checks from investors. “This was purely because our product and website had the word ‘Bitcoin’ in it,” he confirmed.
As Balasubramanian believes that it’s unrealistic to drive mainstream Bitcoin adoption without the support of larger players like Visa, he understands the value that a large financial services giant can bring to a crypto-focused startup.
More established crypto companies are also becoming increasingly aware of the benefits that partnerships with Visa and Mastercard can bring to the industry. Bill Zielke, chief marketing officer of BitPay, one of the largest blockchain payment providers, told Cointelegraph that financial services giants are openly embracing change in the payment industry through new partnerships:
“Payments are undergoing massive transformation, and digital payments are among the fastest growth areas. Visa and Mastercard have both announced partnerships with leading blockchain payment companies like BitPay and Coinbase.”
What this means in practice is that crypto-powered plastic cards backed by Mastercard can easily enable customers to convert crypto into fiat to be spent anywhere Mastercard debit is accepted. The concept has been groundbreaking in terms of driving mainstream adoption of cryptocurrency. To put this into perspective, BitPay claims on its site that it has processed over 100,000 cryptocurrency transactions per month in 2020.
Mastercard has also recognized the value in becoming involved with digital currency growth. In July this year, the payment provider announced the expansion of its cryptocurrency card program. Mastercard mentioned that all cryptocurrency card partners are invited to join the company’s Accelerate program in order to innovate faster.
Forgetting the roots?
While partnerships between financial service giants and crypto startups are promising for growth, some may question if these relationships go against the foundations that Bitcoin and other cryptocurrencies have been built upon. Afterall, Bitcoin’s value lies in the fact that it is decentralized and therefore not regulated by government entities.
J. P. Thieriot, CEO of Uphold, a cryptocurrency payment platform, told Cointelegraph that there’s a delicate balancing act in capturing the opportunities presented by digital currencies and app-based financial services, all while protecting the bank-controlled rails that keep cryptocurrencies on track. “Of course, once acquired by a company like Visa or Mastercard, a fintech will become subject to these same constraints,” he said.
While this may be, Balasubramanian remains optimistic, pointing out that large payment networks are slowly but surely making things easier for crypto companies looking to drive innovation:
“Previously, a massive hierarchical chain of program managers, card issuers and processors blocked the gates to innovation of bitcoin-to-fiat payment technologies. Since inception, we have literally seen this landscape change from a series of conversations with various fintech players that end or begin with ‘No Bitcoin companies allowed’ to ‘Let’s build something usable with Bitcoin.’”
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Originally Posted Here: cointelegraph.com/news/payment-giants-drive-crypto-adoption-by-engaging-with-startups
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The Swiss canton of Zug is making it easier to imagine a world in which cryptocurrency users are resolutely in the mainstream.
The canton — which has earned itself the moniker of “Crypto Valley” for its positive stance towards cryptocurrencies — will begin allowing citizens to pay taxes in Bitcoin (BTC) and Ether (ETH).
According to Bloomberg on Sept. 3, “tax settlement by means of crypto currency will be available to both companies and private individuals up to an amount of 100,000 Swiss francs ($109,670).”
Roughly 127,000 people live in the region, which has previously taken steps to accept Bitcoin payments for select government services.
The new, significantly more wide-ranging move to accept taxes in crypto has been enabled by a partnership between the canton and crypto broker Bitcoin Suisse AG, which is based in Zug.
Bitcoin Suisse has previously partnered with Swiss authorities in Zermatt to enable taxpayers in that region to use Bitcoin as a means of payments.
Bitcoin Suisse founder Niklas Nikolajsen bullishly told reporters that “there’s almost nothing controversial about trading Bitcoin anymore. It’s completely mainstream.”
In his view, Bitcoin’s strong rally during the coronavirus pandemic is likely to strengthen the case for the currency’s resilience and longevity amid a rapidly changing economic landscape.
Despite this horizon, in the immediate aftermath of the COVID-19 crisis, local cryptocurrency firms have struggled. The Swiss federal government recently rejected a 100 million franc request by the canton of Zug intended to help keep local crypto businesses afloat.
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Source Cointelegraph: cointelegraph.com/news/crypto-valley-residents-can-now-pay-taxes-in-bitcoin
Bitcoin (BTC) losing 5% in a day has sparked major changes for miners, data shows as mining pools suddenly send large amounts of BTC to exchanges.
Data from on-chain monitoring resource CryptoQuant reveals that Sept. 2 saw outflows spike across major mining pools.
CryptoQuant expects “war” over BTC bull market
Taking three pools — Poolin, Slush and the now-defunct HaoBTC — total outflows for Wednesday hit 1,630 BTC ($18.5 million).
The figure dwarfs those seen recently, and came as BTC/USD rapidly lost $12,000 levels to bounce off $11,150.
Mining pool outflow comparison. Source: CryptoQuant/ Twitter
For Ki Young Ju, CEO of CryptoQuant, miners may be taking the opportunity to rearrange the competition, now that Bitcoin is trading broadly higher than in most of 2020.
“I think it’s going to be the war of miners between those who want a Bitcoin price rally and those who don’t,” he told Cointelegraph in private comments.
“As I know, some Chinese miners already realize their mining profitability (return on investment), and they might not want new mining competitors joining the industry because of the bull market.”
Despite coins likely making their way to exchanges, the danger of a sell-off due to the price drop remains less likely, Ki continued.
“Miners are good traders,” he added. “I think they are just looking for selling opportunities, not capitulation.”
Fundamentals stay near record high
Miners are no strangers to price-induced transfers, something which bolsters CryptoQuant’s theory. In May, directly after the block subsidy halving, similar behavior was observed as price volatility ensued.
As Cointelegraph reported earlier this week, network fundamentals still highlight optimism among participants, with hash rate and difficulty circling all-time highs.
At press time, estimates placed the upcoming difficulty adjustment, set for four days’ time, to lower difficulty by an almost imperceptible 0.13%.
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Authorities in Russia continue the game of ping pong in regulating cryptocurrencies like Bitcoin (BTC) even after passing the country’s first crypto law.
Russia’s Ministry of Finance has reportedly proposed a set of amendments to the law “On Digital Financial Assets,” or DFA, which bans many operations with crypto.
According to local news agency Izvestia, the proposed amendments envision a “blanket ban on any operations with virtual money for individuals and individual entrepreneurs” except for three scenarios. The ministry reportedly wants to ban all crypto transactions except the obtaining of assets through inheritance, bankruptcy and enforcement proceedings.
The amendments reportedly intend to prohibit miners from receiving payment for cryptocurrency mining. “Standalone crypto mining is legal, but it loses its financial value because the payment is usually processed in Bitcoins and Ethers,” Izvestia reports.
The latest news brings even more confusion to Russia’s current legal situation with crypto. After Russia finally passed its DFA bill in July 2020, local authorities subsequently said that the regulation will be set out in another law referred to as the bill “On Digital Currency,” or DA. While the DA bill is expected to pass in late 2020, the DFA law is scheduled to be adopted in January 2021, banning crypto-denominated payments in Russia.
In late August 2020, Russia’s telecom regulator Roskomnadzor blocked the country’s largest crypto-related website, BestChange.ru. Providing an aggregator of about 400 local crypto exchange websites, the platform was reportedly said to distribute information about buying or selling products with cryptocurrencies like Bitcoin. BestChange claims to have never provided any information about such services.
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