Vasant Pabhu, Visa’s chief financial officer (CFO), recently joined a growing list of financial executives criticizing cryptocurrencies. In an interview with the Financial Times, the executive reasoned that cryptocurrencies are in a bubble, and that they’re mostly used for criminal activity.
To back up his point, Prabhu recalled various encounters in which ill-informed investors told him their experiences with cryptocurrencies. The encounters were a “real shock” to him, as the investors have “no idea what they are doing.”
The executive at the mainstream payments company added that six months ago a bank teller told him he was going to sell bitcoin in March, because he thought that was when the cryptocurrency’s price would peak. A member of his extended family, over Thanksgiving, revealed that an $8,000 crypto investment he made doubled in value.
Commenting these experiences, Prabhu said:
“This is the ultimate thing that you hear about when you have a bubble, when the guy shining your shoes tells you what stock to buy.”
Prabhu recognized that cryptocurrency fans are becoming increasingly influential, and revealed he doesn’t live far from “true believers” in Silicon Valley who he says see him like a “dinosaur.”
While Visa is reportedly experimenting with blockchain technology to facilitate cross-border corporate payments, it doesn’t settle cryptocurrency transactions itself. Its CFO noted that fiat money is issued by the Federal Reserve, so he knows who “stands behind it.” With cryptocurrencies, he implied, no one knows “who’s good for the money.”
Visa currently connects about 3 billion cardholders, 46 million payment locations, 17,000 financial institutions. The company doesn’t stop consumers from using its network to buy cryptocurrencies, although it goes to “great lengths” to comply with know your customer (KYC) and anti-money laundering (AML) rules.
Prabhu noted that cryptocurrencies, in contrast, are a “favorite” for criminals:
“It’s very hard to get dirty money through a banking system. Cryptocurrency is phenomenal for all that stuff… Every crook and every dirty politician in the world, I bet, is in cryptocurrency.”
In his opinion, cryptocurrencies are a speculative investment, operating in a “very unsettled regulatory environment.” These are still cryptos’ early days, he said, and Visa will be watching them closely.
The Financial Times added that financial technology author Chris Skinner claimed it was “complete rubbish” to suggest cryptocurrencies are mostly used for criminal activities. Per his words, this is a myth that the financial community wants to promote.