Visa payment cards laid out on a computer keyboard.
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Visa is betting that crypto-investors still want to spend their digital currencies even though prices have plummeted this year.
The payments giant is teaming up with global exchange FTX to offer debit cards in 40 countries with a focus on Latin America, Asia and Europe. Cards that are already available in the US will be linked directly to the user’s FTX account to invest in cryptocurrency. According to Visa’s CFO, the move allows customers to spend digital currencies without transferring them out of an exchange “as they would with any bank account.”
“Even though values have fallen, interest in crypto is still strong,” Visa CFO Vasanth Prabhu said in a phone interview with CNBC. “We don’t have a position as a company on what the value of cryptocurrency should be or whether it’s good in the long term — as long as people have things they want to buy, we want to facilitate that.”
The deal comes as a price bitcoin and other cryptocurrencies have halved from their all-time highs in November. As of Friday morning, bitcoin was trading around $20,000, down 57% since January.
It’s Visa’s latest foray into the space and complements more than 70 crypto partnerships. A company from San Francisco has already joined forces with FTX competitors Coinbase and Binance. Competitor Mastercard was on a similar path, also a partnership from Coinbase to NFT and Bakkt to allow banks and merchants in its network offer crypto-related services. American Express said it is exploring the possibility of using its cards and network with stablecoins that are pegged to the price of the dollar or another fiat currency. But earlier this year, the CEO said that consumers shouldn’t expect to see a crypto-linked AmEx card.”in the near future.”
FTX CEO Sam Bankman-Fried acknowledged some irony in these partnerships. Cryptocurrencies like Bitcoin were originally designed to bypass banks and middlemen. But banks and payment companies are suddenly embracing the technology as cryptocurrencies become mainstream and help increase the volume of payments.
“We see this as a technology that disrupts traditional payment networks,” Bankman-Fried told CNBC by phone. “You, as a traditional payments company, have to make a decision: do you want to build on it or do you want to fight it? I respect the fact that many of them lean towards it.”
Bankman-Fried also said the ability to pay with cards is key to the market’s growth, beyond being a speculative asset or, for some, a store of value. The Visa partnership makes it easier for merchants to accept cryptocurrencies without setting up proprietary technology. Visa and FTX convert it on the back end. As Prabhu said, “everything is done behind the scenes.”
Both executives said the biggest opportunities are in emerging markets, where currency volatility and inflation make access to digital assets more attractive than they might look in the US. Bankman-Fried named Turkey and Argentina, where inflation exceeded 83% and 78%, respectively.
“A lot of these things are potentially cool and valuable in the United States, but even more so when you look globally,” Bankman-Fried said. “That’s where you’ll find places with very poor toll rail alternatives and a lot of demand for something better.”
Visa’s Prabhu noted the demand for stablecoins that are pegged to the price of the dollar or another fiat currency. The CFO said they often see people opening accounts to store crypto “and use it like a bank account.”
While Fortune 500 companies like Visa are using the technology, there have been some high-profile explosions in the industry this year. Lenders Celsius and Voyager filed for bankruptcy after freezing withdrawals, while the collapse of hedge fund Three Arrows Capital saw billions disappear from markets within days. Visa’s CFO said the company has so far been able to avoid the impact of the crypto crisis.
“Nothing is risk free, you do your best – so far the risk controls have worked well and our due diligence has worked well,” Prabhu said. “Overall, we are delivering innovation while protecting the Visa brand.”
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