World’s first ‘Crypto-backed’ credit card launched by Nexo and Mastercard
The crypto lending platform Nexo, together with global payment company Mastercard, is launching a credit card with a portfolio of crypto coins as collateral. This way, users can get a line of credit without having to sell their digital coins.
The line of credit is free as long as you use less than 20 percent of the deposit. After that, the cost percentage increases to 13.9 percent;
With every transaction or cash withdrawal at an ATM, the user receives a small reward in crypto or in Nexo’s own tokens;
The card’s official issuer is the company DiPocket, which links the card to a crypto wallet at Nexo;
The card will initially only be launched in Europe, with a worldwide roll-out to follow.
“Hodlers” credit card
This is a new development where crypto and established financial networks are joining forces as digital assets become even more mainstream. With the innovation, Nexo, the company of the Bulgarian entrepreneur Antoni Trenchev that operates from Lithuania, is explicitly targeting the “hodlers”: crypto owners who, after the purchase of their tokens, continue to hold their Bitcoins and other coins and do not trade with them, regardless of whether the market price is high or low.
Such investors are therefore certainly not willing to pay with their crypto coins in a store or online, but some may be interested in a credit card where their crypto wallet serves only as a guarantee, Nexo thinks.
The growth company has therefore entered into an alliance with one of the big players in the payment sector, Mastercard, which means that the card can be used at 92 million merchants worldwide. It is initially a virtual card for the smartphone, but good customers can also get a physical card.
Different from traditional credit cards
Most traditional credit cards are unsecured and have a fixed credit limit. “The Nexo card requires no minimum repayments, monthly fees or inactivity fees. There are also no currency costs up to a maximum of 20,000 euros per month,” says Nexo.
The card is linked to a Nexo-provided crypto-backed line of credit. This makes it possible to use multiple assets as collateral such as Bitcoin, Ether and the Tether (USDT) stablecoin among others.
There are no restrictions on the amount a customer can spend or withdraw from the open line of credit, and interest is only paid on the amount of credit actually used.
“Mastercard recognizes that digital assets are revolutionizing the financial landscape,” said Raj Dhamodharan, Mastercard’s head of crypto and blockchain products and partnerships.
Europe first, rest of the world will follow
Nexo said the card will initially be available in select European countries. It will allow users to pay without having to sell their digital assets such as bitcoin, which will be used as collateral to back the credit granted.
Nexo expects the Nexo Card to be used at 92 million merchants worldwide where Mastercard is accepted. The card will become available in “select European markets”, according to Nexo. According to the company’s website, the Nexo card is available to residents of 29 countries, including Belgium, Cyprus, the Czech Republic, Finland, France, Germany and the United Kingdom.
Nexo’s co-founder and managing partner Antoni Trenchev emphasized that the new product launch is crucial for the synergy between the existing financial network and digital assets. According to Trenchev, “this unique product will enable millions of people in Europe and in the future worldwide to spend money instantly without having to give up the potential of their cryptocurrencies. It therefore offers unprecedented day-to-day utility for the emerging asset class.”
Crypto crosses the traditional financial world
“This is the latest proof of the immense synergy between the traditional financial network and digital assets. This unique product will enable millions of people to spend money instantly without giving up the potential of their cryptocurrencies, providing unprecedented day-to-day utility for the emerging asset class,” Trenchev said in a press release.
Mastercard says it “believes that digital assets are revolutionizing the financial landscape” and wants to be involved with these kinds of partnerships.