As more traditional banks and financial players enter the crowded cryptocurrency field, they are bringing more attention and more legitimacy to this often-mysterious, murky area of digital payments.
The latest example: Card brand Mastercard has made a couple of major inroads into offering and securing its own cryptocurrency offering. And with it, the well-known card brand is also drawing a greater focus on cybersecurity and compliance, honed over decades of working with more conventional banks and regulators.
Mastercard began laying the all-important IT security groundwork nearly two months ago, announcing plans to buy crypto-security company CipherTrace, which manages fraud protection, anti-money laundering and forensic financial investigations for more than 900 different types of cryptocurrencies for more than 7,000 traditional banks, cryptocurrency exchanges and other related providers.
“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 & intelligence at Mastercard, said in a statement when the acquisition was announced. “With the rapid growth of the digital asset ecosystem comes the need to ensure it is trusted and safe.”
Last week, Mastercard laid another foundational piece in its crypto-strategy, launching a partnership with Bakkt, a platform for buying and selling digital assets like crypto — building off the cybersecurity foundation it had already began building. "A lot of people are rushing to get into crypto fast and these questions aren't being answered," Mastercard CEO Michael Miebach said during a company earnings call last week. "Crypto ... has a lot going on and we have a role to play."
Between cryptocurrencies and the scorching hot market for non-fungible tokens (NFTs), Mastercard and many other players in the traditional financial ecosystem are not only establishing a path inward for their efforts, but a means to secure it.
Through the CipherTrace acquisition, Mastercard will integrate an established platform for crypto-focused cybersecurity and fraud-monitoring already used by several conventional FSIs and crypto-exchanges around the globe. Under the card brand’s ownership, CipherTrace is expected to partner with other financial technology and digital wallet vendors, as well as public- and private-sector organizations on cryptocurrency and blockchain projects.
In its effort to boost its digital assets reach to retail and business customers, and secure those digital assets, Mastercard has invested and partnered in a number of other fintech players, including BitPay, Gemini and Uphold.