Credit card and finance company Mastercard Inc. today introduced a new system that will allow banks and card issuers to identify and stop transactions in crypto assets that could expose their customers to a risk of fraud.
According a report Exclusively shared with CNBC, the new service is called Crypto Secure and will use artificial intelligence and blockchain data powered by CipherTrace Inc., a crypto monitoring company acquired by Mastercard in September 2021.
Using Crypto Secure, banks and card issuers will be able to view incoming transactions with color-coded ratings and depictions of potentially dangerous activity. The risk of fraud occurring on a given crypto exchange is displayed with a number and color code with a spectrum ranging from green for “safe” and red for “dangerous”.
The platform itself does not take any action against transactions. Instead, it’s up to the card issuers and banks themselves to decide whether to decline or accept.
According a report from blockchain analytics firm Chainalysis, through July 2022, $1.9 billion worth of cryptocurrency has been hacked, compared to just under $1.2 billion over the same period in 2021. The same report concluded that this trend would not change anytime soon.
“The entire digital asset market is now quite a large and substantial market,” said Ajay Bhalla, president of cyber and intelligence business at Mastercard. “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.”
According to Bhalla, the platform would also provide a way for Mastercard partners to stay compliant as crypto regulations begin to solidify globally.
Compliance has become an important goal for many banks and other services working with crypto assets as governments around the world have begun to pay increased attention to the industry. Examples include a report from the Financial Stability Supervisory Board released today calling on Congress to pass several laws strengthening regulation on cryptocurrency assets and European Union officials laying out a new regulatory proposal to tame the “Wild West” of crypto markets by targeting fraud, money laundering and other criminal activities.
Mastercard said it already offers a similar service for traditional financial transactions and this new service extends them to crypto assets such as Bitcoin and Ethereum.