The idea that any form of FX payments will ‘digitalize’ is utter hogwash and is backed up by the FCA

Will brokers be able to use digital assets with Visa and Mastercard to receive and send client funds? Not a chance.

This week’s sensationalist media reports hint that the payments industry – a rather dubious sub-sector of the financial services business that has been relied on tremendously by retail electronic trading brokerages ever since the mainstream merchant services companies began making life difficult for brokers to accept deposits from retail clients – is likely to be ‘digitalized’.

By digitalization, the users of jargon and buzzwords mean that payments companies are looking to move toward cryptocurrency as a base unit for transactions.

This, by all accounts, is absolutely not feasible.

As last week drew to a close, the thought around this insinuated that despite the annual growth of cryptocurrency market capitalisation, traditional financial institutions are not yet ready to recognise the role of digital assets in the global economy, and although the first cryptocurrencies appeared more than ten years ago, there is still some scepticism about the blockchain industry.

Yes there is, and rightly so.

It was stated by those with a vested interest that Visa became one of the first international corporations to invest in the crypto industry, becoming the first company to hire blockchain developers back in 2018. Today, the company is continuing to expand the department of specialists working with digital technologies. It has become clear that large financial companies are starting to take blockchain more seriously.

In May 2020, the USPTO announced that Visa Corporation had applied to develop a digital currency using blockchain technology.

The first cryptocurrency debit cards began to appear in the same year. Striking examples are the Visa MCO Cards by Crypto.com and the Flexible Crypterium Card. But not everything is as smooth as it may seem, as the customer needs cryptocurrencies to buy a cryptocurrency-powered card. More specifically, from 50 to 50,000 MCO tokens are required in order to order such a card. The given crypto debit card is said to be very useful for Crypto.com users, as they are able to receive cashback and take advantage of special bonuses.

Those attempting to get a last ditch attempt at convincing brokers that they need to use cryptocurrency as a method of transacting client funds via Visa, PayPal or Mastercard may well have seen the tenuous attempt by Crypterium last week to demonstrate that the future of payments for online services is via digital assets. Well, it is definitely not.

This morning, the Financial Conduct Authority (FCA) in the United Kingdom officially banned the trading of CFDs in cryptocurrency.
FinanceFeeds is well aware that brokers such as easyMarkets and Plus500 were early entrants into that market around two years ago, and both lost millions within a week from crypto CFD trading.

Cryptocurrency is a non-entity, it does not exist, has no credibility, no backing and no market stature. It is the work of fraudsters, token scammers and exchange mavericks, most of whom have run away with client money, with said clients believing they have been investing in an ‘asset’ when really it is thin air.

The hyperbole last week went along the lines of that taking into account the growing trend of blockchain integration into a broad spectrum of industries, it is becoming obvious that the financial industry will be leading the adoption charge. The advantages offered by blockchain as a financial off-ramp and a processing infrastructure that surpasses the capabilities of traditional systems are making the technology a prime candidate for investments by major payment processors. It will take the giants some time to embrace the power of blockchain in full, but it is obvious that the time is nigh.

You have as much chance of this as you have of seeing Shergar.

Given the FCA’s quite justified disdain for anything relating to digital assets, the banning of CFD trading with crypto assets today was unsurprising, but rather late, given the UK’s firm stance on such fraudulent schemes.

The trend of partnerships between traditional financial entities and blockchain platforms to issue cryptocurrency debit cards is still not on the rise. Rather oddly, earlier this year Visa partnered with FinCEN-registered crypto exchange CoinZoom and decentralised finance platform Eidoo.

Who uses these? That’s right. Nobody. It is likely that any broker that went down this route would find that their bank would terminate its relationship with them on grounds of anti money laundering rules.

It should be noted that Visa’s role in the cryptocurrency industry is not limited to partnerships with promising projects. In May 2020, the USPTO (the United States Patent and Trademark Office) announced that Visa Corporation had applied to develop a digital currency using blockchain technology. The currency is said to include assets such as the US dollar, euro, pound and yen. This technology will use a centralised computer that receives requests with a serial number and physical currency denomination, according to the USPTO.

Yes, the FCA has finally banned crypto CFDs. The question is, when will its payments arm ban crypto payments and put all of this hot air to rest where it belongs?

The NFA a few years ago outlawed the use of credit cards and other online payment methods for depositing client money into trading accounts among US brokerages. The only way is via bank transfer.

It is likely that other regulated regions will go the same route.

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