Exclusively revealing its news to CNBC on Monday, Mastercard stated that it has collaborated with the regulatory technology platform Feedzai to better combat and impede fraud in cryptocurrencies. The integration of Feedzai with Mastercard's CipherTrace Armade platform, used by financial institutions to oversee the activity of more than 6,000 crypto exchanges, will be a significant stride forward in the war against fraud and deceit within the crypto domain.
Mastercard is intensifying its battle against fraud executed through cryptocurrency exchanges. The corporation informed CNBC that it has formed a partnership with Feedzai, an AI-based regulatory technology platform designed to combat financial fraud and money laundering on the web. CipherTrace Armada, a tool utilized by banks to monitor over 6,000 crypto exchanges for illegal activity, suspicious behavior, and money laundering, will be incorporated directly into Feedzai's technology, not through an API. Feedzai will be able to detect and block possible fraud transactions and potentially illegal money laundering activity quickly by 'inhaling' the data. According to Feedzai data, approximately 40% of scam transactions are heading directly from a bank account to a crypto exchange currently. Furthermore, Mastercard will also benefit from Feedzai's artificial intelligence technology by identifying and blocking suspicious transactions instantly, while still being able to recognize legitimate transactions. Feedzai RiskOps platform examines transactions worth over $1.7 trillion yearly. The firm, with headquarters in Coimbra, Portugal and San Mateo, California, currently holds 100 patents and routinely earns around 10 patents each year in order to protect its technology. Nuno Sebastio, founder and CEO of Feedzai, cautioned, "Many banks that think they are preventing illegitimate cryptocurrency transactions are only blocking transactions engaging the leading regulated crypto entities and failing to consider the rest."
This action signifies Mastercard's endeavor to incorporate crypto into the mainstream financial system, equating it with traditional monetary assets through regulatory compliance and industry standards.
Banks and other major financial institutions are becoming more curious with experimenting with crypto in their products and services. However, the next step, introducing crypto products as a main offering, has not been as easily achieved.Due to the absence of thorough regulations and their preconceived link to fraudulent activities, banks are cautious of digital assets. According to data from blockchain analysis provider Chainalysis, worldwide crypto-related losses increased by 79% from the prior year, reaching $14 billion. Mastercard, a giant in handling payment processes worldwide, is competing with fellow payment company Visa through its own fintech services. Banks in the U.K., such as JPMorgan, NatWest, and HSBC, have blocked or restricted crypto transactions due to potential fraud, generating criticism from Coinbase CEO Brian Armstrong who believes this contrasts the U.K.'s intention to become a "Web3" hub. President of cyber and intelligence solutions for Mastercard, Ajay Bhalla, commented that digitalization of finance yields both risks and opportunities. Bhalla added that Mastercard's new partnership with Feedzai will help financial institutions identify which transactions are legitimate.The endeavor is built on Mastercard’s acquisition of U.S. blockchain sleuth firm CipherTrace in 2021, through which the company released CryptoSecure, a product designed to detect and obstruct transactions from crypto exchanges vulnerable to deception.
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