Visa has announced it will allow the use of the cryptocurrency USD Coin to settle transactions on its payment network, the latest sign of growing acceptance of digital currencies by the mainstream financial industry according to Reuters.
The pilot program with payment and crypto platform Crypto.com and plans to offer the option to more partners later this year, it said.
Visa’s use of the Ethereum blockchain removes the need to convert digital coins into traditional money before the transaction can take place—removing pre-existing complexities for businesses in this new era of Decentralised Finance (DeFi).
The USD Coin (USDC) is a stablecoin cryptocurrency whose value is pegged directly to the U.S. dollar.
Tesla Inc boss Elon Musk said last week that customers can buy its electric vehicles with bitcoin, marking a significant step forward for the cryptocurrency’s use in commerce.
“We see increasing demand from consumers across the world to be able to access, hold and use digital currencies and we’re seeing demand from our clients to be able to build products that provide that access for consumers,” Cuy Sheffield, head of crypto at Visa, said.
Among the most immediate use cases noted by Sheffield: a growing number of crypto wallet firms have been coming to Visa in the hopes of issuing cards. But that issuance differs from “traditional” card issuance because these crypto firms have built everything on the foundation of digital currencies.
“[Crypto wallet firms] source consumer dollars in digital currencies, and they operate their corporate treasury in digital currency, so it’s sometimes been difficult for them to have to manage converting digital currencies back into traditional fiat that is deposited into banks just to settle their obligations with Visa through existing bank wires,” he said.
Traditionally, if a customer chooses to use a Crypto.com Visa card to pay for a coffee, the digital currency held in a cryptocurrency wallet needs to be converted into traditional money.
The cryptocurrency wallet will deposit traditional fiat currency in a bank account, to be wired to Visa at the end of the day to settle any transactions, adding cost and complexity for businesses.
Visa’s latest step, which will use the ethereum blockchain, strips out the need to convert digital coin into traditional money in order for the transaction to be settled.
Visa said it has partnered with digital asset bank Anchorage and completed the first transaction this month — with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage.
Africa Money and DeFi Summit
The Africa Money & DeFi Summit will connect Africa fintech leaders, global platforms and thought leaders on the new opportunities in Decentralized Finance (DeFi) at the fourth Africa Tech Summit in Nairobi. An array of keynotes, panels and breakout sessions will deliver key insights and offer opportunities to connect, network and do business across the African fintech and DeFi landscapes.