Major card network provider Visa, is rolling out a pilot program to settle transactions with a digital stablecoin via the cryptocurrency Ethereum.
San Francisco-based Visa said in a press release today that it’s tapping a pack of partners to make the new service happen in its evolving efforts to bridge traditional fiat currencies to the world of digital assets. USD Coin is a stablecoin backed by the U.S. dollar and its standards were developed by Centre Consortium.
Working with crypto platform partner Crypto.com and digital bank partner Anchorage, Visa will settle a portion of obligations in the stablecoin USD Coin under this new Crypto.com Visa card program, the release said. In using the cryptocurrency Ethereum, Visa is relying on one of the most widely traded cryptos.
Typically, Visa only settles transactions in a traditional fiat currency, but cryptocurrency and fintech companies are increasingly calling on established payments players to engage in digital transactions. Visa acknowledged that more traditional approaches can add “cost and complexity” for the new breed of payments digital companies.
“Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors,” Visa Chief Product Officer Jack Forestell said in the release. The pilot announced today is “really an extension of what we do every day, securely facilitating payments in all different currencies all across the world.”
Many traditional payments companies and governments were initially skeptical of working with digital currencies, but have become more open to the prospect since the pandemic led to increased payments activity online and the value of some cryptocurrencies skyrocketed. For instance, Ethereum has soared 13-fold over the past year, according to valuations from Coindesk. Credit card rival Mastercard has also entered the world of digital asset services.
“To continue accelerating the world’s transition to cryptocurrency, we need partners who understand the opportunity and the tools that will help us get to market faster and more efficiently," Crypto.com CEO and Co-founder Kris Marszalek said in the release. "Having been a Visa partner for several years, we’re excited to deepen that relationship through our global agreement and to pioneer an exciting world-first in stablecoin payments,”
Centre Consortium was co-founded by digital currency pioneers Coinbase and Circle in 2018 and seeks to collect banks, fintech companies, cryptocurrency firms, payments players and other financial services companies as members.
In January, Anchorage became the first federally regulated digital bank when the Office of the Comptroller of the Currency gave conditional approval for Anchorage Trust company, a South Dakota chartered trust company, to become Anchorage Digital Bank. “Anchorage’s platform has been purposefully built for institutions like Visa to build new products in crypto,” Anchorage Co-founder and President Diogo Mónica said in the statement, noting the company has been working with Visa since 2019.