Posted 8 months ago | by Catoshi Nakamoto
Mastercard one of the first investors in the Digital Currency Group has announced that it has entered into an agreement to buy crypto startup CipherTrace for an undisclosed sum of money.
CipherTrace develops numerous AML (anti-money laundering) tools that help businesses and law enforcement trace illicit digital currency transactions.
Mastercard Wants To Make Crypto “Safe”
Mastercard stated as crypto grows there is a need to ensure that the digital asset ecosystem is safe and trusted.
“Digital assets have the potential to reimagine commerce, from everyday acts like paying and getting paid to transforming economies, making them more inclusive and efficient,” Ajay Bhalla, president of cyber and intelligence at Mastercard, said in a statement. “With the rapid growth of the digital asset ecosystem comes the need to ensure it is trusted and safe.”
Mastercard stated the deal to buy CipherTrace would help its customers protect themselves and comply with regulations as the payment giant starts to embrace crypto. CipherTrace boasts that its platform is used by 150 clients worldwide including the world’s largest banks and crypto exchanges. Ciphertrace’s competitors include New York-based Chainalysis and London-based start-up Elliptic.
It’s important to mention that CipherTrace was originally funded by the U.S. government’s Department of Homeland Security (DHS) and Defense Advanced Research Projects Agency (DARP.) If that’s not enough the AML company is backed by Silicon Valley investors.
Mastercard previously announced that its nearly one billion users would be able to spend cryptocurrencies at more than 30 million merchants, starting with stablecoins.
While Mastercard expressed, it plans to start with supporting stablecoins due to their “reliability and security.” Mastercard declined to name any cryptocurrencies it will integrate.
However, the payment giant stated there are four criteria to assess prospective assets it may add: “robust consumer protections including consumer privacy and security, strict KYC compliance, adherence to local laws and regulations, and stability as a means of payment.”
MasterCard also previously noted it is “actively engaging with several major central banks around the world” to support central bank digital currency initiatives or CBDCs.
“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. 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.”
The firm further noted that when it does integrate cryptocurrencies into its network, similar to Paypal, once a merchant accepts crypto, it would be converted to fiat value at the point of sale.
“In all of these cases, cryptocurrencies still don’t move through our network. Our crypto partners convert the digital assets on their end to traditional currencies, then transmit them through to the Mastercard network. Our change to supporting digital assets directly will allow many more merchants to accept crypto — an ability that’s currently limited by proprietary methods unique to each digital asset. This change will also cut out inefficiencies, letting both consumers and merchants avoid having to convert back and forth between crypto and traditional to make purchases.”
Although, Mastercard appears to be just “getting into crypto,” in reality the company invested in its first Bitcoin investment going back to 2015 with its funding of Barry Silbert’s Digital Currency Group (DCG). Six years later, Mastercard announces that it will be adding digital assets to its payment options and then they purchase an AML service. Make no mistake Mastercard always planned to enter into the crypto digital asset space and seeded its influence early on.
Bitcoin is currently trading at [FIAT: $45,680.57] DOWN -1.8% in the last 24 hours according to Coingecko at the time of this report.