Mastercard's potential $2 Billion move into crypto through the acquisition of Zerohash, a crypto infrastructure startup, could revolutionize the traditional banking system and potentially eliminate the concept of "banking hours" as we know them. This move signals a significant shift in the financial landscape, with traditional finance giants actively investing in and owning critical components of the cryptocurrency ecosystem.
Mastercard is reportedly in advanced negotiations to acquire Zerohash for a deal valued between $1.5 billion and $2 billion. This acquisition would provide Mastercard with direct access to the infrastructure that supports crypto trading, custody, and compliance. Zerohash offers APIs for crypto trading, staking, and custody, essentially acting as a "crypto-as-a-service" provider.
The acquisition aligns with Mastercard's broader strategy to enhance its cryptocurrency capabilities and compete with other major payment companies like Visa and PayPal, which are also investing in blockchain-based payment infrastructure. Mastercard has been steadily building its crypto strategy, including launching crypto-linked cards, integrating blockchain data analytics, and expanding CBDC partnerships. Acquiring Zerohash would fast-track Mastercard's ability to offer crypto services directly or through its partners.
Zerohash, founded in 2017, provides crypto and stablecoin infrastructure, enabling banks and fintech firms to offer blockchain-based products in stablecoins, tokenization, and cryptocurrency trading. Zerohash has secured a Markets in Crypto-Assets (MiCA) license in the European Union, giving it the regulatory footing to operate as a crypto-asset service provider across the European Economic Area. This milestone accelerates its ability to offer stablecoin and tokenization services across the EU bloc.
The integration of crypto into Mastercard's existing payment rails could lead to several transformative changes in the banking sector. One significant impact could be the reduction, or even elimination, of traditional banking hours. Crypto transactions operate 24/7, potentially enabling Mastercard to offer real-time payment and settlement services, regardless of the time of day or day of the week. This always-on functionality could eliminate the need for businesses and consumers to adhere to traditional banking hours for processing transactions.
Another potential impact is the improvement of cross-border payments. Integrated crypto and stablecoin rails may enhance cross-border payments, reduce costs, and offer new options for fintechs and consumers. This could particularly benefit emerging markets, where access to traditional banking services may be limited.
Mastercard's interest in stablecoins is a key aspect of its crypto strategy. Stablecoins offer stability and reliability that businesses and consumers crave in a currency. Mastercard's focus on stablecoins, fiat on-ramp systems, and tokenization paves the way for a future where digital and traditional banking are not competitors but collaborators.
Mastercard has also been proactive in ensuring the security and compliance of its crypto offerings. In 2021, Mastercard acquired CipherTrace, a cryptocurrency intelligence company, to enhance its crypto capabilities and provide greater transparency in blockchain activities. CipherTrace's tools help organizations comply with anti-money laundering (AML) regulations, a significant concern with cryptocurrency.
While the acquisition of Zerohash is a significant step for Mastercard, regulatory clarity on issuance, custody, and settlement remains a primary uncertainty. However, the company's strategic moves in the crypto space, including partnerships, investments, and acquisitions, position it as a leader in the evolving financial ecosystem.
