Stablecoin Cards Fuel Illicit Crypto Flows and Sanctions Evasion
The growing use of crypto-enabled credit and debit cards has caught the attention of regulators and security experts. These cards allow users to convert digital currencies into real-world money when swiped at Visa and Mastercard terminals. While they can be linked to cryptocurrencies like Bitcoin and Ether, the volatility of unpegged coins makes them a poor means of exchange. Instead, stablecoins have gained popularity, with a market value of over $300 billion.
The surge in stablecoin cards is largely driven by the increasing number of providers and issuers. In the first half of this year, crypto startups received $10 billion in venture capital through nearly 750 deals. Venture capitalists are pouring money into AI, but some are retaining a soft spot for cryptocurrency finance. The involvement of Visa and Mastercard has enabled crypto providers to offer cards carrying the two payments giants' logos that can be used anywhere in the world.
However, the spread of stablecoins worries regulators in poor countries, as it could lead to pseudo-dollarisation of their economies. Regulators in America, Europe, and Hong Kong have encouraged the growth of digital currencies by writing clearer rules. As a result, cryptocurrencies have gained respectability, and stablecoin cards were used in transactions worth over $1.1 billion in August, three times as much as a year earlier.