- Singapore chosen to be first market for new cards
- Both fiat and crypto can be used to fund the card
- Next plan is to allow loans against crypto-collateral
The Hong Kong-based, Crypto.com, plans to bridge the gap between fiat and crypto for its customers with a new type of credit card. Crypto.com, formerly known as Monaco, will be issuing new Visa debit cards, which can be backed with both fiat and digital currencies. The company plans to support Bitcoin, Litecoin, Ether, Binance Coin (BNB) and their own proprietary token, MCO. While the card will not function as direct-withdrawal from the digital currency funds, it will allow these digital currencies to be converted into seven fiat currencies, which include: USD, Singapore dollar and the Hong Kong dollar. According to Crypto.com’s CEO and co-founder, Kris Marszalek:
“To holders of cryptocurrencies, having the peace of mind that you can readily convert back into fiat currencies and cash out is very important. (…) 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.”
While this concept in itself is not entirely new (eg BitPay Visa), the company has more ambitious plans than just offering a crypto-debit card. Crypto.com has also applied for a money lending license in both Singapore and Hong Kong. The intention is to offer loans against the collateral offerings of Bitcoin and their MCO token. Because those seeking a loan from the company are putting up collateral, Marszalek says that the company would not face any credit risk from borrowers, which he believes is better and may prove disruptive to the credit card industry. He states specifically:
“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.”
While KYC procedures would be practice for debit card users, there is no need for this for the lending aspect as, again, customers are putting up their Bitcoin or MCO holdings as collateral to allow for a loan of 40-60% of said collateral.
Crypto.com raised $26.7 million USD from the sale of its ICO in May, and plans to earn revenue from transaction processing fee revenues, as well as from its digital currency trading and automated buying and selling services, which are on the future roadmap.