The payments firm has numerous relationships with cryptocurrency exchanges. The exchanges issue Visa cards to their clients, enabling retail investors to spend cryptocurrencies. When a customer uses the Visa card, the exchange sells cryptocurrency of equivalent value and pays Visa with conventional fiat money.
In this case, Visa allowed Crypto.com to pay part of its Visa card program obligations using the USDC stablecoin instead of fiat money. It plans to offer the service to other partners later this year.
Most cryptocurrency companies would prefer to pay using cryptocurrency or stablecoins rather than bank transfers.
“Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors,” said Jack Forestell, EVP and chief product officer, Visa.
The pilot was in conjunction with Anchorage, the digital asset custody firm, which is now a chartered bank. In the announcement, Visa said the integration with Anchorage enhances Visa’s capability to support future central bank digital currencies (CBDC).
As new blockchain solutions gain traction, such as nonfungible tokens (NFTs) and soon security tokens, there’s an increasing need for tokenized payments. Until CBDCs are issued, stablecoins fit the bill where settlement is denominated in fiat currencies. Regulators are nervous about stablecoins potentially creating new systemic risks. But in the absence of a CBDC, regulatory compliant stablecoins are the viable alternative options.