Nexo and Mastercard team up to launch crypto-secured credit card
Nexo and Mastercard team up to launch crypto-secured credit card

Crypto exchange and lending platform Nexo is launching a digital asset-backed crypto credit card in partnership with Mastercard and DiPocket as part of its latest effort to facilitate transactions using cryptocurrencies.

In a press release issued yesterday, Nexo called this innovative instrument the first of its kind. It will operate as a secure line of credit backed by customer assets held on the Nexo platform and the card will be accepted at any of the more than 90 million establishments currently powered by the Mastercard network.

DiPocket will act as the card issuer for this offering and the instrument will allow users to spend their digital assets without having to sell them.

The Nexo payment card will initially only be available in Europe and will allow Nexo account holders to borrow funds at a 0% inflow rate as long as they maintain a loan-to-value (LTV) ratio below 20 %. The applicable APR for higher LTVs was not disclosed by the company in this case.

According to Nexo, users will be able to spend up to 90% of the fiat value of their crypto assets. Meanwhile, they have also stated that there will be no exchange fees for balances below €20,000 per month.

Crypto investors won’t have to give up or transfer their crypto holdings to access the product, Nexo clarified, and the provider plans to offer 2% cashback for every transaction. These rewards will be paid in Bitcoin (BTC) or NEXO – the platform’s native crypto token.

Nexo said it had already conducted a pilot test of this payment card in Europe and the results were quite satisfactory as the limited group of users who had access to the beta product showed “extraordinary interest” in the instrument.

Regarding the alliance, Mastercard Chief Crypto Officer, Raj Dhamodharan, said, “Mastercard believes digital assets are revolutionizing the financial landscape and we are at the forefront of innovation with programs like our partnership with Nexo to provide people with new and unique. -benevolent choices in how they pay for and activate their crypto holdings”.

Meanwhile, Antoni Trenchev, the co-founder of Nexo, said: “This unique product will allow millions of people, first in Europe and then around the world, to spend instantly without having to give up the potential of their crypto. -currencies, providing unprecedented daily utility. for the emerging asset class”.

What are the advantages of this type of card?

Several companies in the crypto world have partnered with traditional financial institutions and fintech companies to facilitate transactions involving the use of digital assets.

Liquidity and ease of use remain the biggest hurdles that crypto products must overcome to gain widespread mainstream adoption.

This alliance between Nexo, DiPocket, and Mastercard facilitates the process of using crypto assets to make regular transactions such as buying groceries, clothes, or coffee.

Other interesting collaborations between crypto and major financial networks include Visa debit card from Crypto.com, Gemini credit card powered by Mastercard, and Visa payment cards from Coinbase and BlockFi.

The fact that users don’t have to sell their holdings to spend their assets to cover living expenses is a particularly attractive feature, as price volatility in the crypto market could lead to mistimed trades that can seriously and unnecessarily harm the investor’s net worth.

That said, some additional details about the inner workings of these products remain relatively unclear, such as what happens when the loan-to-value ratio exceeds the 90% threshold and what is the applicable APR for loans that exceed the 20% quota. % mentioned by Nexo.

Crypto-assets are highly volatile unregulated assets. Your capital is in danger.


LEAVE A REPLY

Please enter your comment!
Please enter your name here