[2021-10-26] Mastercard and Bakkt Partner to Offer Innovative Crypto and Loyalty

[yurez]

Mastercard customers can now enable consumers to buy, sell and hold cryptocurrency, deliver unique, crypto-centric loyalty opportunities, and streamline issuance of branded crypto debit and credit cards

LAS VEGAS & ALPHARETTA, Ga. & PURCHASE, N.Y.--(BUSINESS WIRE)--Today at Money20/20, Mastercard (NYSE: MA) and Bakkt (NYSE: BKKT) announced a multifaceted partnership to make it easier for merchants, banks and fintechs in the U.S. to embrace and offer a broad set of cryptocurrency solutions and services. Consumers, in turn, will experience expanded access to the digital asset ecosystem.

Source and continuation of news: https://www.businesswire.com/news/home/20211025005487/en/Mastercard-and-Bakkt-Partner-to-Offer-Innovative-Crypto-and-Loyalty-Solutions

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[o_e_l_e_o]

This phrase from their press release is bullish: "As brands and merchants look to appeal to younger consumers and their transaction preferences...". Sounds like they've done quite a bit of market research and they believe this is the direction things are headed in years to come.

Do we know they will actually allow me to pay with my own bitcoin? It's not going to be one of these nonsense custodial systems like PayPal where I have to buy bitcoin in their system which I can only spend in their system and cannot deposit or withdraw? Any word about KYC requirements or how much they will be charging in fees?

It's great for adoption, but I'd still prefer to pay a merchant directly and not via a middle man, particularly a middle man which is one of the biggest centralized entities in fiat banking.

[SFR10]

Do we know they will actually allow me to pay with my own bitcoin?

It appears that they would allow their users to pay with bitcoin and other cryptocurrencies:

• Mastercard will also integrate crypto into its loyalty solutions, enabling its partners to offer cryptocurrency as rewards and create fungibility between loyalty points and other digital assets. This means that consumers can earn and spend rewards in cryptocurrency instead of traditional loyalty points and seamlessly convert their crypto holdings to pay for purchases.

It's not going to be one of these nonsense custodial systems like PayPal where I have to buy bitcoin in their system which I can only spend in their system and cannot deposit or withdraw?

Apart from what I said earlier, it's still pretty much the same ^{[unfortunately]}:

• These include the ability for consumers to buy, sell and hold digital assets through custodial wallets powered by the Bakkt platform and streamlined issuance of branded crypto debit and credit cards.

Any word about KYC requirements

I couldn't find anything but since we're dealing with US consumers here, then I expect it to be the worst/most complete KYC process.

[stompix]

Do we know they will actually allow me to pay with my own bitcoin? It's not going to be one of these nonsense custodial systems like PayPal where I have to buy bitcoin in their system which I can only spend in their system and cannot deposit or withdraw? Any word about KYC requirements or how much they will be charging in fees?

Of course, it's going to be like that.
Both MasterCard and visa are just intermediaries, it's the bank you have a card with that is in charge of your actual money and that lets you deposit and withdraw from that account. Same here, Mastercard is just the middle man between Bakkt and the merchant, and as SFR10 quoted, Bakkt will act just like any other bank, but instead of dealing with just accounts in euros or USD or bolivars they will offer support for bitcoin.

A card loaded with BTC will be no different than using a card linked to a Euro account in the UK. The bank will be in charge of your coins and the fx rate and Mastercard will provide the infrastructure.

Banks and other financial institutions that issue cards through Mastercard will be able to issue cryptocurrency debit or credit cards that let people make payments and earn rewards in bitcoin.

As for KYC, common, you believed for more than a millisecond there won't be any??
It will be a lot like the other cards we have now, from Wirex or Binance, the sole difference is that those cards will be issued by traditional banks, I think you're thrilled to create an account and deposit at BoA or Deutsche Bank, right? 

[o_e_l_e_o]

Well, if that's all the case, then this brings very little. No one is going to sell bitcoin to fiat on an exchange, so they can send their fiat to Mastercard/Bakkt to buy bitcoin on their platform, so the bitcoin can be sold and converted in to fiat at the point of sale with a mastercard bitcoin card or similar. Fees on top of fees on top of fees. I want to be able to walk in to any merchant with a credit card terminal and send them bitcoin directly from my own hot wallet.

Also, since this is being rolled out in the US, I would like to see Mastercard put some effort in to helping to address our ridiculous tax laws, where buying a cup of coffee with bitcoin is a taxable event. Otherwise, their whole system remains pretty much impossible to use legally.

[Poker Player]

Well, if that's all the case, then this brings very little. No one is going to sell bitcoin to fiat on an exchange, so they can send their fiat to Mastercard/Bakkt to buy bitcoin on their platform, so the bitcoin can be sold and converted in to fiat at the point of sale with a mastercard bitcoin card or similar. Fees on top of fees on top of fees.

It would make more sense for someone to buy Bitcoin at Baakt and then spend it with Mastercard, although for us it is not a good option. I imagine this is not intended for the average forum user, but for a user who knows little about cryptocurrencies, so buys them at the click of a button from their financial institution, such as Revolut. I won't use it but I guess people who get into this world might use it.

Also, since this is being rolled out in the US, I would like to see Mastercard put some effort in to helping to address our ridiculous tax laws, where buying a cup of coffee with bitcoin is a taxable event. Otherwise, their whole system remains pretty much impossible to use legally.

That would be ideal, and I created a thread about it a while ago. The current laws consider Bitcoin something similar to stock shares, and not as a currency. To consider it a currency would be at least in part to recognize the defeat of fiat currency as legal tender in the country, and to waive the taxation of capital gains.

[DaveF]

Also, since this is being rolled out in the US, I would like to see Mastercard put some effort in to helping to address our ridiculous tax laws, where buying a cup of coffee with bitcoin is a taxable event. Otherwise, their whole system remains pretty much impossible to use legally.

Mildly OT, but still interesting with that fact is with the Coinbase Visa ( https://bitcointalk.org/index.php?topic=5348368 ) if you use any crypto to fund the card that they sell off as you make purchases it's a taxable event. EXCEPT if you use USDC then they say it's not taxable. So, you could have, in theory, bought BTC from Coinbase years ago at a lower price. Moved it off and sold it for USDC at another exchange and brought it back as USDC and are now spending it with no tax reporting.

Yes I know by law you should report it, it's just an interesting loophole. I'm sure once all the details of this deal are out and released there will be some reporting holes too.
*I report more then I should or probably really have to since I do have so many different taxable events from different places (most nothing to do with crypto) it's just not worth not reporting it since the hassle of audits / fines is worse then paying a few exta dollars in tax.     YMMV

-Dave

[o_e_l_e_o]

It would make more sense for someone to buy Bitcoin at Baakt and then spend it with Mastercard, although for us it is not a good option. I imagine this is not intended for the average forum user, but for a user who knows little about cryptocurrencies, so buys them at the click of a button from their financial institution, such as Revolut. I won't use it but I guess people who get into this world might use it.

Yeah, I'll keep an eye out for the full details out of interest, but it sounds like it isn't going to be something that appeals to you or me. I'm sure it will lead to some people buying and using "bitcoin" (even if it is not actually bitcoin) who wouldn't have done so otherwise, but the question is how many of these people will then have enough incentive to move away from this custodial not-really-bitcoin nonsense and buy, hold, and spend bitcoin directly themselves.

To consider it a currency would be at least in part to recognize the defeat of fiat currency as legal tender in the country, and to waive the taxation of capital gains.

Technically, as bitcoin is now legal tender of a recognized foreign nation (El Salvador), it should already be classed as currency, but of course the US government won't do that. Even just applying the same limit of exempting it from capital gains for all transactions below $200 would go a long way to sorting out the regulatory mess bitcoin currently finds itself in.

EXCEPT if you use USDC then they say it's not taxable.

Well, I suppose if your token is pegged 1:1 with USD, then selling it for USD does not realize any gains, and your gains would have been realized when you sold the BTC for the USDC in the first place. Either way, the IRS still want you to pay tax on those gains; all that is changing is when you realized those gains.