Mastercard has taken a big step toward cryptocurrency adoption with the purchase of CipherTrace, a blockchain analytics startup. CipherTrace creates tools that help companies and government officials suss out illegal cryptocurrency transactions much like Chanalysis and Elliptic. The exact financial details of the sale have yet to be disclosed.
Mastercard says that by integrating this with its own cybersecurity technology, it can give businesses greater transparency into the crypto space, helping them understand risks and manage their digital asset regulatory and compliance obligations.
Ajay Bhalla, president, cyber and intelligence, Mastercard, says: “With the rapid growth of the digital asset ecosystem comes the need to ensure it is trusted and safe. Our aim is to build upon the complementary capabilities of Mastercard and CipherTrace to do just this.”
CipherTrace is one of an increasing number of crypto forensics start-ups that use sophisticated technology coupled with human intelligence to analyse blockchain transactions, helping companies and law enforcement monitor suspicious activity and map out the crypto-criminal ecosystem.
The deal comes after Mastercard announced in February that it would start supporting selected cryptocurrencies directly on its network this year, following in the footsteps of fintech rivals PayPal and Square. Meanwhile, US regulators are increasingly circling the growing but loosely regulated industry.
“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,” said Ajay Bhalla, president of cyber and intelligence at Mastercard.
“We help companies – whether they are banks or cryptocurrency exchanges, government regulators or law enforcement to keep the crypto economy safe,” said Dave Jevans, CEO, CipherTrace. “Our two companies share this vision to provide security and trust throughout the ecosystem. We are thrilled to join the Mastercard family to scale CipherTrace’s reach across the globe.”
CipherTrace will also help drive continued innovation with a diverse range of partners, like fintechs, crypto-wallet providers, governments, etc., while also allowing the company to deliver on the principles it has established for all blockchain-related programs, the statement said.
The acquisition is part of Mastercard’s strategy in the digital assets space to help provide customers, merchants and businesses with more choice in how they move digital value. It follows a number of investments the company has made, including partnerships with Uphold, Gemini and BitPay to create crypto cards, the creation of new platforms to test and support Central Bank Digital Currencies, programs to support the broader use of blockchain technology and NFTs, and the potential to support select stable coins directly on its network.
Mastercard is investing where the future lies. Last week, it notified that it will buy the open banking technology provider Aiia to deepen its toes in the open banking space, a revolution in traditional banking.
To be able to cope with the new technological changes in the industry is imperative to stay relevant. Mastercard is hitting the right notes, which should drive its long-term growth. Shares have dipped 1.9% year to date compared with the industry’s decline of 11.4%.
These companies boast a big brand name and are widely trusted by their customers. Thus the endorsement of cryptocurrencies by these entities will have a positive bearing on people. If the same ensures tight security, then the adoption will be faster, easier and on a much broader scale.
With the acquisition of CipherTrace, Mastercard will act as a critical enabler of the adoption of crypto related transactions. Mastercard strongly advocates the use of digital currencies. To this end, it partnered with Uphold, Gemini and BitPay to create crypto cards, new platforms to test and back the Central Bank digital currencies, programs to facilitate the expansive use of blockchain technology and NFTs, and the potential to circulate select stable coins directly on its network.
Visa, the predecessor of Mastercard in terms of market share, informed that more than $1 billion worth of cryptocurrency was spent by consumers using its crypto-linked payment cards this year.
Mastercard is investing where the future lies. Last week, it notified that it will buy the open banking technology provider Aiia to deepen its toes in the open banking space, a revolution in traditional banking.