The CEO of the world’s largest credit card company told shareholders on Tuesday that stablecoins and central bank digital currencies (CBDCs) will play a “significant role” in the payments space going forward.
The company also released its 2022 annual report, in which it wrote about its both complementary and competitive relationship with cryptocurrencies.
Visa Crypto Insights
As CEO Alfred Kelly explained during a conference callVisa already has “multiple initiatives” underway in the blockchain space and has already invested numerous crypto funds and companies.
“We’re at the very beginning, but we continue to believe that stablecoins and central bank digital currencies have the potential to play a meaningful role in the payments space,” Kelly said.
Stablecoins combine the peer-to-peer nature of cryptocurrencies like Bitcoin with the relative price stability of another currency or asset – often the US dollar. This solves the problem of price instability that critics – including central banks – the claim prevents Bitcoin from being a legitimate currency.
Tether (USDT), which is the largest stablecoin by market cap, has a higher daily trading volume than any other crypto.
Meanwhile, CBDCs are a government-issued currency in digital form, built on blockchain rails. Federal Reserve Vice Chairman Lael Brainard said support shown for launching a CBDC in the United States by providing “safe central bank accountability in the digital financial ecosystem”.
Last year, Visa shape a partnership with ConsenSys to extend CBDCs to existing payment networks.
In its report, Visa said it was “developing or participating in alternative payment systems or products,” which could potentially disintermediate its role, some of which include “stablecoin-based payment initiatives.”
In a section titled “Competition,” Visa named “Digital Wallet Providers” and “Alternative Payments Providers” among them, the latter including “cryptocurrency platforms.” While these sites are currently primarily focused on e-commerce and mobile payments, the company expects them to “extend their offerings to the physical point of sale.”
“Technology and innovation are changing consumer habits and driving growth opportunities in e-commerce, mobile payments, blockchain technology and digital currencies,” the company said, adding that crypto payment platforms “can to be both a partner and a competitor of Visa”.
Damage to reputation
Cryptocurrencies not only represent technological threats and opportunities for Visa, but also reputational threats. The company’s report claimed that its brand could be negatively affected when its services are used for “legal, but controversial” products like cryptocurrencies, equating them with “adult content” and “gaming” in this regard. .
A month before the bankruptcy of FTX, Visa planned a partnership with the exchange to provide a crypto debit card in 40 countries. The program was terminated shortly after the collapse.
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