Interest in cryptocurrency is on the rise – both among major financial players and hackers. Mastercard’s Crypto Secure solution will help provide secure cryptocurrency transactions as banks and financial institutions increasingly enter the sector.
The hype around crypto has attracted attention from incumbent institutions looking for ways to provide cryptocurrency exposure to their clients. Like many others established companies, Mastercard is slowly moving into the sector with the introduction of a new crypto fraud prevention solution. Crypto Secure will improve security for card issuers, allowing them to assess the risk profile of crypto providers and determine which transactions to approve.
If incumbents want to integrate cryptocurrencies within their infrastructures, they will need to invest in crypto fraud prevention solutions as cyberattacks are on the rise. The popular belief that blockchain technology is un-hackable is misguided. Hackers have been able to find weaknesses in blockchain networks, siphoning cryptocurrencies into their own accounts.
$3.2bn stolen via crypto hacks in 2021 alone
Between 2019 and the first half of 2022, over $4bn was stolen due to hack attacks – led by the $611m lost by Poly Network in August 2021. According to blockchain research firm Chainalysis, over $3.2bn was stolen via crypto hacks in 2021 – of which $2.3bn was stolen from decentralised finance (DeFi) projects. DeFi projects saw rapid growth in 2021 as more companies develop financial solutions on blockchain networks. But hackers have been able to identify gaps in the infrastructure of such projects, leading to successful attacks.
Crypto as a mainstream payment method remains a distant prospect
It is unlikely Mastercard is expanding into the cryptocurrency sector because it believes crypto will achieve widespread adoption as a method of payment. But there is an opportunity to facilitate access for consumers looking to hold cryptocurrencies as an investment. Integrating blockchain technology within its infrastructure will allow Mastercard’s card holders to easily access fiat and cryptocurrencies.
The introduction of Crypto Secure from a household name like Mastercard means banks and financial institutions looking to provide cryptocurrency services to their customers will feel more comfortable doing so. While this move could lead to greater crypto adoption among the general public, Mastercard and its partners will need to clearly disclose that protection schemes are not offered for cryptocurrencies.
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At the moment, crypto hacks have mainly affected cryptocurrency companies and have not spread to the rest of the financial system. But with companies like Mastercard providing access to cryptocurrency transactions to its clients, there is an urgent need for better crypto fraud prevention – especially for DeFi projects.