Global remittance company MasterCard criticized Bitcoin for presenting risks and lacking benefits.
The comments came in a 4-page letter that was written in response to the UK government’s Call for Information on digital currencies. It questioned digital currency companies over their claims to provide lower transaction costs, saying that their promises will falter soon upon facing additional cost requirements to comply with certain consumer protection and anti-money laundering laws.
The letter said something similar about the digital currency system’s low payment processing time and security infrastructure, and read:
“We would argue that, when compared to MasterCard’s network, the claims pertaining to the speed and safety of digital currencies [do] not hold up, not least given that on average it takes 10 minutes for a block to be verified and that digital currencies are far more susceptible to hacking attacks.”
MasterCard went on writing that the lack of any intermediary on Bitcoin’s distributed ledger blockchain makes it a far riskier technology, against what it is originally perceived as. According to the American firm, the decentralized nature of Bitcoin can guarantee no returns for consumers if the system collapses. In comparison, it referred to the UK’s Financial Services Compensation Scheme which protects investors from such potential risks.
In the latter part of the letter, MasterCard also briefed the UK Treasury with other potentials risks of digital currencies, mainly related to consumer protection, money laundering, unprotected exchanges, unreliable mining methods, and volatility.
The company however concluded by asking for better standards and regulation for the Bitcoin industry, where each and every transaction made on the blockchain should be administered by a properly-licensed authority. It went on to say that:
“Licensing and prudential supervision of all administrators should be comparable to non-bank money transmitters, with obligations to perform Know Your Customer checks, maintain an AML program, file suspicious activity reports and address cybersecurity vulnerabilities.”
MasterCard meanwhile is the 4th largest investor in the FinTech sector.