Financial giant Mastercard made a recent move that many people thought would never happen: They offered to buy a stablecoin issuer.
And they aren’t just spending chump change to it. They are spending nearly two billion dollars on it.
This acquisition isn’t a whim decision, though. It’s an indication of a fundamental shift in how they are doing business.
To be fair, Mastercard has a solid track record of making bold moves in the crypto space. Back in 2020, Mastercard offered “pay with crypto” cards. A year later, the payments giant decided to allow merchants to accept crypto payments (based on consumer demand).
So how does this new acquisition change the crypto landscape? Let’s dig in!
The details of the acquisition
Oliver Acuna and Will Canny with Coindesk write,
Mastercard agreed to buy BVNK, a stablecoin infrastructure company, for as much as $1.8 billion
$1.8 billion isn’t an afterthought. That is serious money even for a company as large and established as Mastercard. Why? To increase the use of digital assets for international payments, cross-border transfers and business-to-business payments.
In other words, it’s a practical move to ensure they can keep up with the changing global payments marketplace.
This is an investment in payment infrastructure for Mastercard. They aren’t betting money on something that may happen. They’re investing money in acquiring a company that helps them to maintain a competitive advantage in the busy payment processing marketplace worldwide. (In case you aren’t familiar with corporate mergers and acquisitions, this is a fairly common way for an established industry heavyweight like Mastercard to expand its core business. Rather than trying to build a thing themselves, they go shopping for a start-up that’s already done the hard work of bringing a product to market… And they buy it.)
If you’re wondering “Why stablecoins instead of bitcoin or ether?” Well, the answer is simple: stablecoins are the “gateway layer,” if you will. Stablecoins generally aren’t for keeping, but rather for spending. Take a look at CoinMarketCap daily volume numbers and you’ll see top stablecoin Tether (USDT) solidly on top; today, Tether volume is twice that of the next most-transacted cryptocurrency, bitcoin. All this to say, stablecoins are for transactions. Mastercard is in the transactions business, after all.
Stablecoin transactions are both faster and less costly than traditional international payments (bank wires, SWIFT and so on). No matter what you think of crypto generally, stablecoins offer very clear benefits at the corporate level.
At the individual level, most of us who own crypto don’t own stablecoins long-term. Rather, we convert currency into stablecoins so we can buy crypto.
The Mastercard acquisition shows us that crypto is showing signs of becoming a normal part of the financial marketplace. That’s exciting.
But won’t this acquisition disrupt their current business?
And it’s a completely valid question.
The answer: Yes, it likely will disrupt their current business process to some extent. But the people asking that question are missing the bigger issue: Their current business is already being disrupted by changes in the financial services industry.
Need examples? Just to mention two, there is the Kraken crypto banking victory that I talked about and the Nasdaq’s deal with Seturion that I’ve also talked about.
The fact is, payment processing technology is moving toward blockchain-based stablecoin transactions precisely because of the benefits (faster, less expensive).
What business (that wants to stay in business) wouldn’t make the change over to a methodology with those advantages?
When you’re talking about a company like Mastercard that processes a massive amount in transactions every year and made $12.9 billion after expenses in 2023, laying out $1.8 billion to maintain that kind of business leadership advantage and profitability is simply a smart move.
In other words, it’s a bigger risk for Mastercard not to acquire a way to facilitate coin-based transactions into their overall payment processing methodology than it is for them to hope that it goes away.
Because cryptocurrencies are not going away. They’re only getting more and more mainstream.
Which leads to another question that you may be asking…
Why should I care that Mastercard spent that much for a stablecoin company?
The answer to that is that the financial world has moved beyond the types of payment processing that they were solely relying on.
Put simply, cryptocurrencies are changing and improving the way that financial institutions, investors and businesses interact. Working with stablecoins is just the start.
In the near-term future, as digital technologies have changed how all kinds of businesses do business (imagine the difference between pre-computer accounting and accounting now), the mainstreaming of crypto is making business faster and more efficient.
What this means for you is that cryptocurrencies are no longer on the fringe. They are no longer moving into the mainstream.
Now, cryptocurrencies are firmly in the mainstream and are continuing to change how everyday people do things in everyday life.
Crypto is now an integral part of the new normal financial system.
That means it’s an excellent time to decide whether your savings would benefit from diversifying with cryptocurrencies, the future of money. If you’d like to find out more about tax-advantaged crypto diversification, you can get more information by getting our free Crypto IRA Guide. Alternately, if you’ve done your due diligence and ready to make your move, you can open a Digital IRA with BitIRA right now (even if it’s 3 a.m.!) in less than 10 minutes.
After all, why should only Fortune 500 companies benefit from the benefits of crypto?
