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Bitcoin and Ethereum climb fast after Visa announces it will allow payments using cryptocurrency

Bitcoin and Ethereum climb fast after Visa announces it will allow payments using cryptocurrency

Huge lender Visa is piloting a program that will allow its partners to use the Ethereum (ETH) blockchain to settle a transaction made in fiat money. In an announcement on Monday, Visa said it will partner with crypto trading platform and credit card issuer Crypto.com to offer a crypto settlement system for fiat transactions later this year. Visa's partners will reportedly be able to exchange USD Coin (USDC) through the credit card payment network to settle transactions in fiat cash.

Visa says its standard settlement process requires partners to send fiat money via bank transfer, which can add "costs and complexity for businesses built with digital currencies." The pilot reportedly would enable Crypto.com to send USDC to Visa's Ethereum address to settle some of the transactions under the Visa credit card program on the crypto trading platform by linking Visa’s treasury to digital asset platform Anchorage.

"Fintechs rooted in crypto want partners who understand their business and the complexities of digital currency form factors," said Visa chief product officer Jack Forestell. "Today's announcement marks an important milestone in our ability to meet the needs of fintechs running their stablecoin or cryptocurrency businesses."

The company said it wants to make this system available to Fintech companies and neo-banks trading cryptocurrencies, including Bitcoin (BTC), Ether (ETH), and USDC. Visa reports that "billions of dollars" of fiat are involved in the settlement of transactions every day.

Crypto.com announced a partnership with Visa earlier this month, whereby the exchange would join Visa's network and expand the reach of its crypto debit card. The company then said it would roll out a fiat lending program to allow cardholders to use their crypto holdings as collateral for fiat loans — money that users can spend in stores that support Visa payments.

Immediately following the announcement of the news, Ethereum and Bitcoin jumped about 7% in price as it becomes increasingly clear that crypto is becoming mainstream and the people want to get there early. This development shows the increasing adoption of the crypto market. For example, BNY Mellon, the oldest bank in the US and largest custodian service in the world, will set up Bitcoin (BTC) services. BlackRock, the largest asset manager in the world, has started buying Bitcoin. Mastercard also announced support for crypto, and Tesla is now accepting payments with Bitcoin.

Furthermore, USDC transactions take place on the Ethereum network, so it makes sense that the demand for and therefore the price of Ethereum will increase after the announcement of Visa. With every transaction on the Ethereum network, a little ETH is required to pay the transaction costs to the validators of the network. As more and more transactions take place, the demand for ETH will also increase and the fact that VISA now also makes payments over the Ethereum network bodes well.