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master Card On Tuesday, the company told CNBC exclusively that it will debut new software that will help banks identify and block transactions from fraud-prone crypto exchanges.
Called Crypto Secure, the system uses “sophisticated” artificial intelligence algorithms to determine the risk of crime associated with crypto exchanges on the Mastercard payment network. The system relies on data from blockchains, public records of crypto transactions, and other sources.
The service is powered by CipherTrace, a blockchain security startup that Mastercard acquired last year. Based in Menlo Park, California, CipherTrace helps businesses and government agencies investigate illegal transactions involving cryptocurrencies. Its main rivals are New York firm Chainalysis and London-based Elliptic.
Mastercard is launching the service against the backdrop of rising crime in the nascent digital asset market.Amount of crypto going into wallets with known criminal ties Soars to a record $14 billion According to data from blockchain analytics firm Chainalysis last year, and by 2022, A spate of high-profile hacks When scam Targeting crypto investors.
The Crypto Secure platform presents banks and other card issuers with a dashboard containing color-coded ratings representing the risk of suspicious activity. Risk severity ranges from ‘high’ red to ‘low’ green.
Crypto Secure makes no judgments as to whether or not to reject any particular crypto merchant. That decision is left to the card issuer itself.
We want to be able to provide the same kind of trust that we provide to digital commerce to consumers, banks and merchants to their digital asset transactions.
Ajay Bala
President, Cyber and Intelligence, Mastercard
Mastercard already uses similar technology to prevent fraud in fiat currency transactions. Crypto Secure extends such capabilities as follows: Bitcoin and other virtual currencies.
Ajay Bhalla, president of Mastercard’s cyber and intelligence business, said the move is to help partners “remain compliant in a complex regulatory environment.”
“The whole digital asset market is a pretty big, substantial market right now,” he told CNBC in an exclusive interview ahead of the product’s launch.
We want to be able to provide the same kind of trust that we provide to digital commerce to consumers, banks and merchants to their digital asset transactions.
Compliance has become a key focus for cryptocurrencies these days, as more and more banks and payment companies offer their own services for trading and storing digital assets. last month, Nasdaq became the latest established financial company to join Wall Street’s acceptance of cryptocurrencies, launching custody services for institutional investors.
Meanwhile, governments on both sides of the Atlantic are looking to introduce new regulations into the cryptocurrency sector, which has been largely unregulated to date.Last month, the Biden administration First ever regulatory framework of the US crypto industry while the European Union has Groundbreaking Cryptography Approved its own.
The payments giant is doubling down on cryptocurrencies at a time when digital currency prices are dropping and volumes are drying up. About $2 trillion less.
Bitcoin is currently trading below $20,000 per coin, down about 70% from its all-time high near $69,000.
Asked about the impact of falling cryptocurrency prices on Mastercard’s digital asset strategy, Barra said the company is “focused on providing long-term solutions to its stakeholders.”
“These are market cycles, they come and go,” he said. I think we need to take the long view that this is a big market right now, evolving and probably going to be much bigger in the future.
Crime in the industry shows no signs of abating despite the low prices of digital tokens. A particularly common method of defrauding cryptocurrency investors of funds this year was by abusing blockchain bridges, tools used to exchange assets from one virtual network to another. Approximately $1.4 billion has been lost due to breaches on these cross-chain bridges since early 2022, according to Chainalysis data.
Against this backdrop, major financial services companies and cryptocurrency platforms are investing in ways to reduce the risk of ill-gotten gains being transferred through their systems. Cryptocurrencies are often criticized for being used for money laundering and other forms of illegal activity. This is partly due to the fact that participants in blockchain networks are pseudonyms.
However, the development of new software tools has made it easier for cryptocurrency criminals to track their illicit profits. Companies are adopting advanced data science and machine learning techniques to analyze data on public blockchains.
Mastercard also looking to keep pace with key rivals visa, has made its own notable investments in the crypto space. In the first fiscal quarter of 2022, Visa said it facilitated his $2.5 billion in transactions from cards linked to accounts on cryptocurrency platforms.
Last year, Visa launched its cryptocurrency advisory practice, advising clients on everything from deploying to exploring cryptocurrency capabilities. Non-fungible token.
Mastercard declined to disclose the overall dollar value of the fiat-to-crypto volume from its network of 2,400 crypto exchanges. However, according to Bhalla, the number of transactions the credit card giant processes in his one minute is now in the “thousands.”
