Hong Kong Startup to Battle Revolving Credit with Asia’s First Crypto Visa Debit CardsIndustry startup Crypto.com, formerly ‘Monaco’ before a rebrand, has revealed its plan to issue 100,000 Visa-powered cryptocurrency debit cards in Hong Kong and Singapore.
The Hong Kong startup confirmed that it would pit its debit cards against the insecure revolving credit practiced by mainstream credit card issuers, as reported by the South China Morning Post. Kris Marszalek, Crypto.com’s founder and chief executive officer, referred the line of credit practice as “unethical,” which unjustifiably allows banks to make profits from undeserving people.
“These people should not be given a credit card in the first place,” said Marszalek.
Revolving Credit v/s Crypto-Backed Lending
The availability of credit when needed is known to be one of the main advantages of Revolving Credit. However, it also influences credit card users to spend more than they afford. Non-payments – or even late payments – can trap borrowers into the maze of compound interests. Also, Revolving Credit allows banks to keep loan rates unhinged, and rights to change credit limits and interest rates at will.
Projecting Crypto.com’s crypto-enabled debit cards as a viable solution, Marszalek revealed that they would offer money lending services to their crypto-card holders. The business model will reject revolving credit practice by choosing to lend fiat money by collateralizing cryptocurrencies. People will only be able to borrow 40-60 percent of their pledged cryptocurrency in fiat money. The method also means that Marszalek would not rely on borrower’s credit scores like its traditional counterparts.
“Crypto.com would only face the risk from volatility in the value of the bitcoin and MCO pledged as collateral,” he said.
Crypto.com has applied for money lending license in the countries it is expanding to, starting with Hong Kong and Singapore. Once approved, Marszalek expects Crypto.com to disrupt the credit card history – once for all.
https://www.ccn.com/hong-kong-startup-to-battle-revolving-credit-with-asias-first-crypto-visa-debit-cards/
