[Daily] Will Visa lose to crypto?

Good morning! Welcome to The Daily Moon. It’s a brand new week and SBF has new sanctions to deal with. The much-maligned founder and CEO of FTX will be denied access to smartphones and will have to communicate via a good old flip phone. Law enforcement wants to keep his access to the internet at the minimum.

Moving on, today we talk about Visa’s crypto dilemma and the NFT madness.

As of Sunday, 4PM IST

The markets had partial relief from mass client exits at crypto bank Silvergate. Bitcoin had a small rally as selloffs got slower. Ethereum was largely flat as investors were concerned about staking withdrawals being pushed to April. S&P 500 and Nasdaq saw buying ahead of the US jobs data release. Back home, Sensex and Nifty rallied on a recovery in Adani Group stocks.

Is Visa Commitment-Phobic?

It made a lot of promises over the past three years, and invested millions of dollars in new partnerships but now it seems like Visa is still not doubling down on crypto. While it’s optimistic about digital currencies, the payment company has also admitted that the market conditions are tough.

Visa is at a crossroads, for one, it has over 65 crypto partners, and then it also set up a full-fledged crypto consulting arm. The original idea was pretty straight forward, to become a bridge between existing payment systems and crypto. But along the way, a lot of shock factors changed the landscape.

The Terra-Luna collapse in May 2022 and FTX’s bankruptcy in November 2022 worsened the situation. Though Visa claims that its expansion strategy is on track, reports suggest that the heat is on.

The cryptic beginningIn 2014, the early days of crypto, financial institutions were exploring. They wanted to find out more about these decentralised digital tokens. Visa too, didn’t make a big-bang entry.

It started off by making small investments into crypto startups such as Chain in 2015 and Anchorage in 2019. Even amidst the funding activity, Visa’s CEO said in 2018 that crypto wasn’t a means of payment. It was almost as if the payments company was interested in crypto but didn’t want to make it public.

Slowly but surely, Visa made deeper inroads into crypto. In 2019 Visa probably realised that it needed to be loud and sure. During the year, it launched a cross-border payment network, entered crypto payment partnerships and also formally entered the crypto cards network.

The number of partnerships have grown almost 10X since then. And in 2021, the company announced tie-ups with 60 platforms to enable crypto payments across 80 million merchants. Visa customers made $2.5 billion worth of payments via crypto cards just between October-December 2021. When CBDCs got popular, Visa entered that business too.

What changed?FUD. Despite tie-ups, Visa had to compete with crypto to maintain its market position. At the same time, a few of Visa’s erstwhile partners have gone bankrupt. Take crypto lender BlockFi, for instance. In 2021, Visa and BlockFi partnered to launch the first-ever Bitcoin rewards credit card. BlockFi turned insolvent in November 2022.  

Something similar happened with FTX where Visa was forced to pull out their co-branded debit cards. As if that wasn’t enough, regulatory uncertainty, especially the US SEC’s crypto crackdown has made Visa jittery. Customers are in a flux, and so is Visa.

We can see some green shootsUnlike its crypto counterparts, Visa’s numbers are intact. In the first quarter of 2023, it reported a 7% increase in payments. Its stock gave better-than-expected returns. What’s riled the market is the management’s crypto avoidance. There was just a passing mention of the market volatility.

Tbf, the crypto markets have largely recovered from the mishaps of 2022 and Visa may find its enthusiasm soon enough. If you go by Visa crypto head Cuy Sheffield’s words, it wants to BUIDL and help others BUIDL. We hope that Visa keeps its promises.

NFT Leads The Cheer

While the rest of the market decides against following a consistent direction, NFT investors are hyped. The NFT market reached a size of $2 billion in February. It hasn’t seen these numbers since the good old days of May 2022.

What prompted this buzz?Blur! A now popular project, which has seen action worth $1.2 billion alone. That’s over 100% growth since last month.

Who else is winning?Ethereum has been a favourite for NFT projects, Polygon saw a piece of the action as well, with trading volume on MATIC grew a crazy 147%.

Other factorsThere are other factors such as the sudden popularity of Ordinals and the ugly monkeys also now inscribing on Satoshis.

And that’s it for today. If this email was forwarded to you, please consider subscribing. It’s free. We’ll never show you an ad or charge you for this. We swear.

Also, to sweeten the deal, here's an offer you cannot refuse! You can refer this newsletter to your friends, family and any amazing community. The top referrer every month wins a guidebook to upcoming potential airdrops and exclusive premier content! Click below to share your unique referral link!

Who are we? This newsletter’s ambition is to educate (and to entertain). The world of money is changing everyday and we want to help you decode what’s happening in the world of crypto, public markets in the US and India.