- Facebook’s Diem, formerly known as Libra, and Visa are looking to extend their reach in the growing crypto payments space.
- Additionally, PayPal’s CEO has underscored the importance of regulatory compliance for the developing industry.
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Visa, PayPal, and Diem, formerly known as Libra, are looking to capitalize on the rapidly growing industry.
- Visa’s newest credit card will feature crypto rewards—helping it cash in on consumers’ appetite for rewards. The card network partnered with cryptocurrency startup BlockFi to introduce the Bitcoin Rewards Credit Card. Users will get 1.5% cash back for every transaction made on the card—which will then be converted to Bitcoin and stored in a BlockFi account in a regular monthly cycle—as well as $250 in Bitcoin if they spend at least $3,000 in the first three months. The card will be issued by Evolve Bank and Trust and come with a $200 annual fee.
- PayPal CEO Dan Schulman highlighted the importance of regulatory compliance. Schulman recently spoke on cryptocurrency regulation issues at an online conference and went on to call on industry players to collaborate with financial regulators to help bring more utility to cryptocurrency. Schulman noted that PayPal was the first firm to get a conditional BitLicense from regulators in New York—which highlights the firm’s dedication to regulatory compliance and could help it long-term as it expands its business into the crypto space.
- Facebook’s Libra cryptocurrency changed its name to Diem and is looking for a fresh start. The Libra Association—now dubbed Diem Association—overlooking the crypto’s development hired key executives and announced that it plans to build a safe, secure, and compliant payment system. This comes after the crypto faced partner fallout and regulatory scrutiny from lawmakers last year.
The crypto payments space has been heating up amid the increased focus on digital payments during the coronavirus pandemic. The emphasis on digital payments during the crisis—due in part to the rapid surge in ecommerce—has likely made way for more interest and focus on crypto payments.
And firms have been capitalizing on this emerging space: Square’s Cash App crypto service generated $1.63 billion in Bitcoin revenues in Q3. Meanwhile, nearly one-fifth of PayPal users have already traded Bitcoin on the app after the service’s US launch last month, according to a study conducted by Mizuho Securities. These offerings could enable players like Visa, Square, and PayPal—which have all become more involved in the crypto space—to diversify their offerings.
But regulatory oversight and compliance remain a barrier to widespread crypto payments usage. The crypto market has been deemed volatile in the past—spurring concern among both consumers and regulators about the use of this payment method. And because it’s a relatively new currency, some regulators feel that it could threaten long-standing financial systems. These concerns have led to a call for more safeguards and measures to be put in place regarding usage.
To combat some of these concerns, PayPal invested a tremendous amount in regulatory compliance before its crypto launch, according to Schulman. Working with financial regulators like global central banks could help crypto payment players like Visa and Square make their offerings more appealing to consumers. And collaborating with regulators could benefit Diem, since it might garner more trust from consumers and help it avoid past pitfalls relating to financial regulation.
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