Crypto.com To Launch Asia’s First Crypto Debit Card & Loan Facility
Hong Kong-based blockchain start-up Crypto.com, which is bringing out Asia’s first cryptocurrency Visa debit card, stated Wednesday that its associate bank has requisitioned to issue cards in the city.
In the next two months that follow, the company aims to ship more than 100,000 cards to customers’ worldwide, beginning with Singapore.
The company believes that it is offering a new payment and withdrawal solution to cryptocurrency holders with the issue of Visa debit card. Kris Marszalek, Crypto.com co-founder and chief executive said “To holders of cryptocurrencies, having the peace of mind that you can readily convert back into fiat currencies and cash out is very important.”
Marszalek further stated
“Not all exchanges support crypto-to-fiat transactions, and even if you hold your digital assets at the exchanges’ wallet, the withdrawal process is also complicated. We believe our product addresses a real need, and enhances trust in digital assets.”
Crypto.com, which renamed itself as Monaco in July, is also planning to obtain money lending licenses in Singapore and Hong Kong. Marszalek said the firm wants to slowly convert itself from being a cryptocurrency debit card provider to a crypto-backed money lender.
If the company’s plan is implemented successfully, then Visa card holders and users of the company’s cryptowallet service could easily get loans with Bitcoin and MCO, native digital asset of Crypto.com, as collateral.
The Visa debit cards are issued in partnership with Germany’s Wirecard Bank. The bank has already obtained a stored-value facility license from the Monetary Authority of Singapore (MAS).
Marszalek said he expects the debit cards, together with Crypto.com’s planned lending service, to ultimately disrupt the credit card industry. Furthermore, Marszalek pointed out that banks have been issuing unsecured revolving credit to clients who would find it difficult to pay their interest rates calculated on “unethical business”.
Revolving credit enables clients to avail loan up to a pre-determined limit and does not have an organized schedule for servicing the loan like an installment loan.
Marszalek said “The credit card business model is one that is bordering on unethical business, as banks make a big chunk of profit from people who cannot afford late fees. These people should not be given a credit card in the first place.”
Crypto.com is not likely to face any credit risk from its borrowers, as only 40% to 60% of the total value of cryptocurrencies is offered as loan.
Crypto.com stated that it will ensure online KYC compliance for debit card applicants, but will not verify the credit history of borrowers before granting a loan. The only risk that Crypto.com should handle is the volatility of Bitcoin and MCO, which are pledged as collateral.
Bitcoin has lost more than 50% of its value since December 2017. So, Crypto.com’s success depends on effective handling of its internal risk limits. It should be noted that money lenders in Hong Kong are not overseen by the financial regulator.
The debit card issued by Crypto.com will be linked to both fiat and crypto wallets. As a result users will not face any hurdle in spending their cryptocurrencies after converting into fiat money. To begin with, Crypto.com supports five cryptocurrencies namely Bitcoin, Ethereum, Binance coin, Litecoin and MCO. The platform also facilitates conversion of these cryptos into seven currencies including the greenback, the HK dollar and the Singapore dollar.
Crypto.com, which raised US$26.7 million between May and June last year through an ICO, has its token (MCO) listed on 21 exchanges. Crypto.com will receive a share of the transaction-processing fee. Additionally, the company will also generate revenue from its cryptocurrency trading services. An automated crypto buying and selling service, which is currently being tested by the firm, is also anticipated to be introduced soon.