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In another step signaling the brisk advancement of the cryptocurrency economy, Hong Kong-based Crypto.com said on Sept.5 it shall roll out over 100,000 debit cards to customers across the globe from its Hong Kong office, starting with Singapore.
Crypto.com’s Rise to Relevance
As reported by South China Morning Post, the blockchain startup offers Visa-branded debit cards – they utilize the financial giant’s liquidity network to process payments – for easy conversion of a customer’s fiat-to-crypto and vice-versa.
Crypto.com co-founder, Kris Marszalek, stated “peace of mind” is supremely essential while dealing with cryptocurrencies as a solid contender to traditional finance. As such, debit card services make the conversion process smoother than crypto-exchanges while making in-store purchases a straightforward affair.
The points mentioned earlier, in turn, create trust in digital assets amongst the general populace.
Formerly known as Monaco, the company rebranded to Crypto.com in July 2018 after a surprise takeover of the revered domain, in a deal reported to have cost over millions of dollars.
Crypto.com now intends to shift from their core card services business to cryptocurrency-backed moneylending and plans to apply for authorized money lender licenses in Singapore and Hong Kong.
If the development goes according to plan, customers could soon take loans with BTC or MCO – the company’s native token – as collateral. Currently, Crypto.com boasts of a stored-value facility license from the Monetary Authority of Singapore and a partnership with Germany’s Wirecard for the Visa network.
Credit Card Industry Disruption
Marszalek ambitiously believes Crypto.com’s lending service and debit cards could infiltrate the broader credit card market, a highly monopolized sector handling trillions of dollars annually.
Taking a dig at institutions, the entrepreneur believes banks approve loans to customers based on unsecured revolving credits, meaning loan issuance without a fixed schedule for repayment.
However, Marszalek terms this an “unethical” practice as banks charge high fees for customers who cannot afford the expensive late fees; to whom the credit loans should not have been issued in the first place at all.
In stark contrast, Crypto.com would not accept any credit risk from borrowers, and loans will make up only 40 percent of pledged collateral.
While strict Know-Your-Customer procedures would apply to customers seeking crypto-loans, checking one’s credit history will not be performed before approval. With this, Crypto.com’s only risk exposure arises from the price volatility of collateralized bitcoin and MCO.
Strict Internal Limits
Given the pioneer cryptocurrency’s value has plummeted over 70 percent since its peak in December 2017, Crypto.com is likely to set strict internal risk limits. In this regard, it enjoys the freedom of setting its terms as the Hong Kong government does not oversee licensed money lenders in the country.
At the time of writing, Crypto.com supports bitcoin, litecoin, ether, MCO, and BNB tokens that can be converted into seven fiat currencies, including the Hong Kong Dollar and USD.
The company will earn revenue per transaction on the network, as well as private crypto-trading facilities. Crypto.com raised over $27 million in May 2017 and is amongst the few blockchain companies with a working product and customer base.