Tuesday, February 28, Reuters reported that Visa (V.N) and Mastercard (MA.N), the leading payment companies in the United States, have halted their plans to create new partnerships with cryptocurrency firms due to recent high-profile failures in the industry. In 2022, the cryptocurrency sector experienced a sharp reversal of fortunes when major players FTX and BlockFi went bankrupt, resulting in investor unease and increased regulatory scrutiny.

According to Reuter’s anonymous sources, both Visa and Mastercard have chosen to postpone the launch of specific crypto-related products and services until the regulatory environment and market conditions improve.

A Visa spokesperson said the “recent high-profile failures” in the industry served as an important reminder that digital currencies still have “a long way to go” until they are considered mainstream payments. However, that doesn’t alter the company’s crypto strategy and focus.

Likewise, a spokesperson for Mastercard pointed out that the company continues to explore ways that blockchain technology can be used to “help address current pain points and build more efficient systems.”

In the last few years, major credit card companies have become more interested in cryptocurrencies as the popularity of this type of asset has skyrocketed. Some have even hailed it as the future of finance. These credit card firms earn a small percentage of transaction value and have established partnerships with various crypto companies while setting up specialized teams to study blockchain technology.

Mastercard collaborated with crypto lender Nexo in April to release the world’s first “crypto-backed” payment card. However, in November, Visa cut ties with FTX’s global credit card agreements just after expanding its partnership with the exchange. American Express (AXP.N) announced in 2021 that it might use cryptocurrencies as a redemption option for reward points in the future.

Yet, American Express does not consider crypto tokens to be a top priority in the near future. An AmEx representative stated in an email to Reuters that the company does not anticipate crypto replacing its primary payment and lending services soon, although they are exploring useful applications for the technology.

Thomas Hayes, chairman and managing member at investment firm Great Hill Capital, suggested that a lack of clear regulatory guidelines is preventing progress. He stated that the delays are unrelated to their primary business, which remains robust, but to an ambiguous regulatory climate for crypto and a decrease in near-term demand/interest for crypto services.

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