Aug 25, 2023

Multiple news outlets are reporting that payments giant Mastercard is terminating its partnership with crypto exchange Binance on co-branded crypto card offerings in Argentina, Brazil, Colombia and Bahrain starting Sept. 22. "The Hash" panel weighs in on the state of Binance as the exchange faces pressure from regulators across the globe.

Video transcript

Mastercard ends Binance Card partnership in latest blow to Crypto Giant. A bit dramatic of a headline I would say by C NBC. But I think this is certainly in line with the reputational risk that is associated with Binance right now. And Mastercard acting on that reputational risk is saying, hey, we're not doing those cards in the Middle East and Latin America anymore. We don't want your name on our product. So I think it stems from a lot of stuff going on with Binance that we've been documenting over these last few months as regulators worldwide, kick the tires and understand if anything shady is going on including us authorities. So I'm gonna toss this straight to Danny for his thoughts in uh on this one. What do you think Mastercard Finance breakup? Does it matter? What, what, what, what do we think of this? Well, it certainly matters and I don't know the numbers of this deal, but let's pretend that I do for a second. Uh Let's just think about it. If your Mastercard, you want to stick with the business decisions that are making you money. I don't know in this environment how much money this was bringing in, right? Like how much revenue was being driven for mastercard by this tie up with Binance? And then does that revenue make it worth the reputational risk of just being associated with finance and the answer regardless of the numbers? Which I don't know but will pretend to obviously was. No. And I don't think that that's, that bodes well for any crypto payment device. You have to remember the way these cards generally work. Uh It's, you, you, you can't pay with Bitcoin from your Bitcoin wallet, right? At a point of sale. What you can do is have it in some sort of some sort of account where it can be that can be drawn from by a credit card processor such as Mastercard or Visa or another layer that feeds into them and then they pay with dollars or euros or, or pesos or whatever at the point of sale so that the merchant doesn't actually have to deal with the crypto. And no, no crypto is going across mastercard Visa networks, but the name Binance is still associated and you know, that's just not good in the eyes of mastercard to be associated. Sam. What's your take on this? Yeah, I think, um, if you look at this from both ends, both from the mastercard and Visa end as well as from the, the finance end, I think the best way to view this is in terms of reputation and marketing um as somebody like Danny who does not know the exact numbers, my last recollection when I was trying to kind of learn about this stuff a while back. Um was that this um card thing was not actually a huge part of Bin's business, something in like the single digit percentage points in terms of its overall revenue. But it was a key way or seen as a key long term way for Binance to recruit new users and to turn specifically Bitcoin and other virtual currencies into day to day payment methods, which is something that crypto has always kind of seen as its eventual golden goose and just hasn't come to happen. So when you look at this from a reputation, a marketing standpoint and the bin and, and then on like a crypto, you know, writ large and I think the erosion of these partnership deals from Visa mastercard and probably long term with other companies and other cards. It's actually going to be a blow more towards the idea of crypto in general being a sort of payment method. I think it's less of just like a Binance mastercard Visa thing. Um And the reputation of these assets as those sorts of payment methods is, you know, gonna go away, Zach, what do you think? I don't know. I mean, I am long term bullish on stable coins being used for payments in new and novel ways. But again, I think your point generally stands as it relates to like these cards, which I think historically, these cards have been very overblown. Right. There'd be like a lot of like, yeah, there's a visa card attached to coin base or something. And I think a lot of it was just sort of very far again from the roots of crypto and probably ultimately not that impactful outside of just some initial euphoria of, oh the big brands like us now. So now we can just see the flip side of that play out. And I think that's all well and good. But I will say despite your proclamation, I think there is a bullish case for stable coins on these open blockchains being used at scale to do cross border payments much more conveniently than these existing cards uh are configured to do. But I gotta get Jen's take, I gotta throw it to you. Well, I tried to use one of these cards, not the Binance one. and it has never worked. So I am because of that experience, just not bullish on any of these um credit card exchange partnerships. My money is still there. I should probably get it off at some point. I agree with all of you. I think from a business and pr perspective, Mastercard looked at what has been going on with B not only in the US but in countries all over the world. They've exited Canada, they've exited the Netherlands. They are um facing regulatory scrutiny in various different countries and just thought, you know, this probably isn't worth it from mastercard's point of view. They've been exploring Web three too. You know, I think last month we heard that they had a bunch of partnerships for this Web Three Music Accelerator. They were recently talking about CBD C the consortium with ripple and fire blocks. And so I think they're starting to explore where their foothold is in the web three space and starting to realize that maybe it's not in um these exchange partnerships. And Zach to your note on the stable coins, you have turned me. I am also becoming very interested and bullish on stable coins as payments especially after paypal's can. Now, before, before the end of next week, I will say P US D properly, we have the P US D and then we have that new Shopify uh partnership with Solana's uh payment infrastructure where people are going to be able to use us DC. So I think the credit cards are out and the stable coins are in and that is my hot take here. You are gonna be sitting pretty when us DC pumps to $2 after these proclamations, my friend. Let's do this thing.

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