MasterCard is Moving into Crypto and Bringing KYC, AML Regs with It
TradeFi is edging into the cryptocurrency space, and it’s bringing TradFi problems with it. Mastercard announced Monday that it will partner with Paxos Trust to develop a program to allow users to buy, hold and sell crypto.
The “Crypto Source” program is reportedly expected to launch in late 2022, and it’s going to be laden with Know Your Client and anti-money laundering regulations, which will eviscerate the financial privacy crypto users desire. Bitcoin Magazine reports:
“There’s a lot of consumers out there that are really interested in this, and intrigued by crypto, but would feel a lot more confident if those services were offered by their financial institutions,” said Jorn Lambert, Mastercard’s chief digital officer.
Lambert told CNBC that despite the bear market, there is still a lot of demand for the asset class. “It would be shortsighted to think that a little bit of a crypto winter heralds the end of it -- we don’t see that,” he said. Also, 60% of respondents to a recent poll said that they would prefer to get exposure to bitcoin and cryptocurrency through their bank. “It’s a little scary to some people still,” he stated.
Mastercard said that its role in this is to ‘keep banks on the right side of regulation by following crypto compliance rules, verifying transactions and providing anti-money-laundering and identity monitoring services.’
Mastercard’s chief digital officer stated “It’s hard to believe that the crypto industry will truly go mainstream without embracing the financial industry as we know it.”
This is certainly what TradFi and regulators want for crypto. Some crypto advocates worry that there won’t be widespread adoption of crypto without such regulations, even as they warn of the dangers that presents.
If you live in the West, you live in an economic and political panopticon. Your government knows who you are, where you live and how much money you earn. They also can gather your phone records, transaction history and online activity with impunity via third-party providers.
If you have money in a bank account, Western governments can call your bank, tell them you are a terrorist, and seize your bank account. Don't think it can happen to you? It happened in Canada to regular everyday citizens protesting against government policies they disagreed with and were agitating for change. The Canadian truckers were not violent thugs with weapons; they used well-established protest tactics to have their voices heard.
Think this is an isolated incident? Authorities in the Netherlands opened fire on a farmer protesting against government plans that would have them cut nitrogen oxide and ammonia emissions by 70 percent in seven years. The state could give two sh*ts about your life if it gets in the way of their plan, plain and simple. You know it, and I know it. There is no need to sugarcoat anything here.
The idea that we are free is folly.
The adoption of KYC and ineffective but invasive AML regulations in the crypto space by legacy financial institutions will capture a small part of the crypto market – that portion that limits its interaction with technology to posting on Facebook. But we believe a primary driver in the demand for crypto is the privacy and censorship resistance it offers. Just as users, capital and talent will seek less regulated markets, so too will crypto users seek platforms and apps that protect their privacy.