Mastercard has released new software that will help banks in identifying and blocking transactions from fraudulent cryptocurrency exchanges. The software called Crypto secure was all set to be released last Tuesday, and it happened successfully. The technology evaluates the risk of criminal activity related to cryptocurrency exchanges on the Mastercard payment network using “advanced” artificial intelligence algorithms. The system makes use of information from multiple sources, including the blockchain, a public ledger of cryptocurrency transactions.
CipherTrace, a blockchain security startup that Mastercard purchased last year, powers this service. CipherTrace, a Menlo Park, California-based company, assists organizations and authorities in looking into questionable cryptocurrency transactions.
The main reason for creating crypto security is to assess the crime-related risks of cryptocurrency exchanges operating within the Mastercard network. It combines the use of artificial intelligence with blockchain data, public records of cryptocurrency transactions, and other sources.
Mastercard was already offering a service to the banks that work on fiat money transactions and now they have launched one for crypto. In the MasterCard network around 2400 crypto exchanges have been already associated.
Ajay Bhalla who is the President of the cyber and intelligence business in an official blog post said: –
“The idea is that we want to be able to offer customers, banks, and merchants the same level of confidence for digital asset transactions that we do for digital commerce transactions.”
Why is there a need for features like Crypto Secure?
In the year 2021 a record $14 billion addition in the suspicious crypto wallet was seen and even the year 2022 is witnessing a lot of scams and hacking. And because of this reason, Mastercard has decided to launch this service to fight crypto fraud.
Australian investors lost $242 million in 2022 as a result of investing and cryptocurrency-related frauds. These are just a few examples, many crypto frauds are happening on a daily basis and because of such incidents some people are making false claims like crypto itself is a Ponzi scheme or is fraudulent. This is creating a negative image of this technology and also making the crypto users and investors uncomfortable and a little scared of the market.
How will this tool work?
Banks and other card issuers will be presented with a dashboard on the Crypto Secure platform. However, this will have color-coded ratings for the possibility of suspicious behavior. Here a high-risk one will be denoted with a red color whereas the low-risk one will be denoted with a green color.
Crypto Secure will not have the authority to decide whether to reject a particular crypto seller. This decision will be up to the card issuer itself. With the new crypto secure service, issuers will be able to:
- Obtain a benchmark rating for comparison to a peer group of financial institutions
- Precisely identify the crypto exchanges
- Evaluate transaction approvals and rejects
- And comprehend their exposure to crypto risk through a single score at a portfolio level.
Both Visa and Mastercard are working on making crypto payment more mainstream. Mastercard has only recently started providing crypto features in countries like Argentina and Indonesia but Visa is already deep into this. Last year only Visa reported that there was $1 billion spent on visas through crypto.
For some time Mastercard is focusing on providing more features related to cryptocurrency. Mastercard announced the introduction of a new class of debit cards last month. That will allow for customization using non-fungible tokens (NFTs).
In order to enable retailers, fintech companies, and banks to accept and extend a wide range of solutions and services involving cryptocurrencies. Mastercard engaged in a partnership with cryptocurrency wallet platform Bakkt in October of last year.
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