Visa has just announced that it will begin using cryptocurrency USD Coin to settle transactions on its payment network, with global wallet partner Crypto.com over the ethereum blockchain.
Crypto.com will now settle a percentage of its obligations for the Crypto.com Visa card program in USDC, which is a cryptocurrency that is pegged directly to the US dollar in a 1:1 ratio. Behind the scenes Visa's digital currency settlement partner is Anchorage, the first federally chartered digital asset bank. Funds will be sent from Crypto.com to Visa's own ethereum address at the bank.
As it stands Visa's business partners need to settle transactions with the credit card provider in fiat currencies that it accepts, but now they can be settled with USDC and put up into the ethereum blockchain. Visa is partnered with 35 digital currency platforms that include Coinbase, Crypto.com, BlockFi, and Bitpanda which collectively have over 50 million active users.
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Visa crypto boss Cuy Sheffield explains: "We've found that many of our crypto partners are building on top of and are using USDC. It was a natural fit".
Another thing that Visa will be moving towards is accessing the Central Bank Digital Currencies (CBDC) when they are available, with CBDCs being issued and managed by central banks and being digital versions of fiat currencies. Sheffield added: "As we engage with central banks across the world, we think it's really important for CBDCs to be integrated into the payments ecosystem".
Visa spent the last year working its way through cryptocurrency to tack it into its existing treasury infrastructure that has billions of dollars per day flowing through 200 markets and 160 currencies. Visa's partnership with Anchorage is key here, with the settling in USDC with Crypto.com making things far easier for international companies to deal with Visa.
Jack Forestell, executive vice president and chief product officer, Visa explains: "Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors. The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency, and it's really an extension of what we do every day, securely facilitating payments in all different currencies all across the world".
The announcement saw the price of Bitcoin skyrocketing from $56K to $58K at the time of writing, and Ethereum from $1710 to $1760 and continuing upwards at the time of writing.