On cryptocurrency exchanges and brokerages, traders are not permitted to use their Discover credit and debit cards to purchase or sell bitcoin or any other cryptocurrency in the market.
In an interview with Bloomberg, Discover CEO David Nelms stated that for financial institutions to process payments for cryptocurrency traders and investors, they are required by the government to implement strict Anti-Money Laundering (AML) systems and closely monitor the transactions of the traders.
For a company like Discover, that would lead to many millions of dollars in additional compliance costs to address cryptocurrency investors.
Nelms also criticized investors in bitcoin, calling them “crooks that are trying to get money out of China or wherever.”
Evidently, the generalization of institutional investors, retail traders, and individual investors including Fidelity, Tim Draper, Winklevoss Twins, Barry Silbert, Mark Cuban, and tens of millions of people in the US, Japan, and South Korea as money laundering “crooks” can be considered as a baseless condemnation of investors within the global cryptocurrency market.
Currently, the global cryptocurrency market has a daily trading volume of $24 billion, which is larger than some of the world’s largest stock markets combined. Bitcoin alone processes $8 billion on a daily basis and has more liquidity than the most liquid stock on earth, Apple.
Nelms added that the only use case of bitcoin he personally sees is money laundering and financial crime, stating, “or if someone steals our credit card numbers they’re going to ask for payments in Bitcoin. Those are the only use cases I’m actually seeing today.”
On a factual level, the argument of Nelms that the primary usage of bitcoin as a money laundering tool for Chinese investors is highly incorrect because the Chinese government imposed a strict ban on cryptocurrency trading in September 2017. As of now, the Chinese market is nearly zero trading volume, and the largest cryptocurrency markets are the US, Japan, and South Korea.
Earlier this week, Robinhood, a major US-based financial services company that allows individuals to invest in publicly traded companies and exchange-traded funds (ETFs), announced its plans to launch a cryptocurrency exchange by next month.
Robinhood developers have already updated the company’s mobile app to add a feature showing the prices of 14 major cryptocurrencies. Mitsubishi UFJ Financial Group (MUFG), the largest financial conglomerate and bank in Japan, also revealed its finalized plans to launch a cryptocurrency exchange within 2018, to address the rapidly increasing demand for bitcoin from institutional investors and retail traders.
The cryptocurrency market is an exponentially growing sector with tens of millions of both individual and institutional investors across the globe eager to invest. Failing to flow with the modern trend and address growing demand from cryptocurrency investors could result in Discover losing its market share to other competitors in the market like Visa, which have been pro-cryptocurrency since 2015.
But, Discover emphasized that if everyday cardholders push for the integration and support of cryptocurrencies like bitcoin and Ethereum, it will consider implementing them in the long-term. For now, Nelms explained that Discover customers are not “clamoring to use it.”
Featured image from Shutterstock.
Last modified: May 20, 2020 9:09 PM UTC