Crypto lender Nexo said on Wednesday it was partnering with Mastercard and DiPocket to launch a credit card backed by cryptocurrency. The card will be launched in select European markets.
The card will be backed by a user’s crypto holdings as collateral. Nexo said in a press release the card will allow users to spend up to 90% of the fiat value of their crypto, without selling any of it. The card can use multiple crypto assets as collateral.
The launch further positions Nexo as an intermediary between decentralized and traditional finance. The firm offers crypto lending and deposit services, as well as traditional services such as fiat exchange and insurance.
Nexo’s offering a first among crypto cards
While crypto-linked credit cards are not a novel concept, Nexo’s offering is the first to use a user’s crypto holdings as a direct collateral, as well as a gauge for their credit line. By contrast, most conventional credit cards are not linked to any collateral, and usually have a set credit limit.
Nexo’s card is linked to a crypto-backed credit line that provides a 0% annual percentage rate for select customers. The card is also usable with over 92 million merchants worldwide that accept Mastercard.
Nexo said the card requires no minimum repayments, and charges no inactivity fees. It will also pay out crypto rewards for each transaction – a common theme among crypto cards.
DeFi and TradFi grow closer
Nexo’s offering highlights the narrowing gap between decentralized finance and its traditional counterpart. Payment stalwarts such as Visa and Mastercard have already tied up with several crypto platforms, including Gemini and BlockFi, to provide crypto-linked credit services.
Mastercard believes that digital assets are revolutionizing the financial landscape.
-Raj Dhamodharan, Mastercard’s Head of Crypto and Blockchain Products and Partnerships
Mastercard is also no stranger to the crypto world, having recently filed trademarks related to NFT offerings and the metaverse. The card operator had earlier this year teamed up with Coinbase to provide payment services for the exchange’s upcoming NFT marketplace.
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