Mastercard partners with Paxos to launch crypto trading for banks

Mastercard announced on October 17 the Crypto Source program, which will make it easier for banks and financial institutions to offer cryptocurrency trading. The payments giant is teaming up with Paxos to launch the service and take care of compliance and security.

The Crypto Source program will act as a “bridge” between the crypto trading platform Paxos and banks, the company said in a press release. Mastercard will also take care of regulatory compliance and security, two sticking points for banks wanting to get involved in offering crypto trading services.

In addition, Paxos will take care of custody and trading services, with Mastercard integrating these services into banks’ interfaces.

“What we are announcing today is a connected approach to services that will help bring users safely and securely into the crypto ecosystem,” Ajay Bhalla, Mastercard’s cyber and intelligence president, said in the press release. “Our recent investments in this space, such as the acquisition of CipherTrace and Ekata, are providing us with a unique set of capabilities to help provide our customers and consumers with the most technically advanced solutions available in the market.”

Lately, banks, from Goldman Sachs to JP Morgan, have made an effort to create crypto teams catering to institutional investors. However, traditional finance players have largely avoided shilling their crypto trading services to retail investors so far. 

Mastercard’s move will also likely am up the competition with exchanges, such as Coinbase and FTX, which have gone on buying sprees as they aim to consolidate the crypto industry following the recent collapses of big players like crypto broker Voyager Digital and crypto lender Celsius Networks. 

Among others, the recent crypto winter might increase the scrutiny from regulators, which is likely to create a more robust regulatory framework that can help assuage retail investors’ fears – mainly if household-name banks facilitate the trading.

“We’re excited to build on our long-term partnership with Paxos–co-innovating to bring safe and secure technology to financial institutions,” Jorn Lambert, Mastercard’s chief digital officer, said. “Our crypto product innovations will provide choice at scale and continue to bring one-of-a-kind opportunities to financial institutions as they seek to offer new, advanced services to their customers.”

Lately, the longtime payments rivals, Mastercard and Visa, have made moves in the crypto sector, starting from the former’s partnership with Hi app on NFTs to the latter’s blockchain link-up with JP Morgan on international payments.