Mastercard, one of the largest financial service providers in the world, has launched a new product called Crypto Secure. In an official press release, the firm said that the new product will help banks identify and stop transactions coming from vulnerable crypto exchanges.
The tool will assess the risk of illegal behavior related to cryptocurrency exchanges on the Mastercard payment network using artificial intelligence algorithms. The system makes use of information from multiple sources, including the blockchain.
The tool has color-coded ratings that depict suspicious behavior on exchanges. Red denotes high risk, while green denotes low. Furthermore, the tool does not decide whether to reject a certain crypto merchant. It is up to the card issuers to make that choice.
The Crypto Secure tool is powered by CipherTrace. CipherTrace is a blockchain security start-up based in California. The start-up was purchased by Mastercard in 2021.
Ajay Bhalla, President of Cyber and Intelligence business at Mastercard, stated,
“The idea is that the kind of trust we provide for digital commerce transactions, we want to be able to provide the same kind of trust to digital asset transactions for consumers, banks, and merchants.”
Major financial giants have already made their way into the crypto industry. Even Nasdaq joined the cryptocurrency bandwagon by announcing crypto custody services for institutional clients. In many cases, it is the clients’ demand that has led to the transition. However, these institutions do have concerns, and with reason.
The entry of major financial institutions into the world of cryptocurrencies is indicative of the industry’s expansion. However, the sector has frequently been plagued by illegal activity. Chainalysis estimates that in 2021, the total amount of funds with criminal histories was a staggering $14 billion. However, the number did drop in 2022, but that is most likely because of the bear market.
Moreover, for big financial firms and service providers to dip their toes into crypto, certain security guarantees are necessary. Hence it is not surprising to see that Mastercard is launching such a tool. In fact, the acquisition of CipherTrace was a hint at the firm’s direction.