Alfred Kelly the CEO of VISA the world’s largest credit card company informed its shareholders on Tuesday that stable coins and central bank digital currencies (CBDCs) will play a “huge role” in making payments going forward.
In its 2022 annual report that was published, the company wrote about its simultaneously competitive and complementary relationship with cryptocurrencies.
Visa already has “a good number of initiatives” going on in the blockchain space, and has also invested in many crypto funds and companies already. This was explained by the CEO during a conference call.
Stablecoins solve the problem of price instability by combining the relative price stability of another currency or asset – usually the U.S. dollar with the peer-to-peer nature of cryptocurrencies like Bitcoin.
Tether (USDT), the largest stablecoin by market cap, has the highest daily transaction volume more than any other crypto.
Meanwhile, CBDCs are digital currencies that are government-issued and are built upon blockchain rails. Lael Brainard, the Federal Reserve vice chair has shown support for the launch of CBDCs in the United States by providing a “reliable central bank liability in the digital financial ecosystem.”
Last year, Visa struck a partnership deal with ConsenSys to connect CBDCs to existing payment networks.
According to its report, Visa said it is “developing alternative payments systems or products,” which has the potential to disintermediate its role, some of which include “ initiatives on stablecoin-based payments.”
In a section of the document titled “Competition,” Visa named “Alternative Payments Providers” and “Digital Wallet Providers” among them, the former of which included “cryptocurrency platforms.” Although the primary focus of these venues is mobile payments and e-commerce right now, the company expects “an expansion of their offerings to the physical point of sale.”
Cryptocurrencies do not only pose opportunities and technological threats for Visa, but also reputational ones too. According to the company’s report, it claimed its brand could be negatively affected when its services are used for “legal, but controversial” products like cryptocurrencies, and equated them to “gambling” and “adult content” in this regard.
VISA had planned a partnership with FTX to provide a crypto debit card in 40 countries. A month after, FTX went bankrupt which led to the termination of the program.
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