Visa CEO: Cryptocurrencies aren’t a threat as they’re “more of a commodity than a payment vehicle”

Al Kelly, the CEO of multinational payments card company Visa, has recently argued cryptocurrencies aren’t a threat to the company as they’re “more of a commodity than a payment vehicle,” although he admitted the firm could “go there” if it has to.

During an exclusive interview with CNBC’s “Mad Money” host Jim Cramer, Kelly noted that there “has to be some market that it becomes somewhat like a fiat currency” in order for the company to be comfortable with cryptos, and added that cryptocurrencies are “certainly” not a threat in the short and medium term.

According to Kelly, Visa would enter the cryptocurrency market if it believes “crypto starts moving from being more of a commodity to actually being a payment instrument. He added:

If it goes in that direction, we will move in that direction. We want to be in the middle, Jim, of every payment flow in the world regardless of how it happens or what the currency is behind it. So if we have to go there, we will go there. But right now, it's more of a commodity than a payment vehicle.

The CEO’s words come shortly after San Francisco-based cryptocurrency exchange Coinbase announced a joint venture with fintech firm Circle. As part of the venture, Coinbase added circle’s stablecoin USDC.

As CNBC notes, the cryptocurrency ecosystem’s rise was fragmented and volatile, although bitcoin, the flagship cryptocurrency, has been trading within a tight range since October 16, making it less volatile than the stock market’s most well-known indexes. Recently the Dow Jones and the S&P 500 sunk and erased this year’s gains, while BTC and most cryptos saw slight declines.

As CryptoGlobe covered, eToro senior market analyst Mati Greenspan has said cryptoassets resisting the stock market’s slump is an “extremely positive” development, as it’s a “prime example” of how cryptocurrencies are “uncorrelated and it only serves to increase their use case a powerful tool for asset management.”

The recent equities sell-off saw Visa’s stock price drop to about $133, before recovering back to $137 amid a wider market recovery. Its recent earnings report showed it beat Wall Street’s expectations, while pointing to a “picture of global consumer confidence.”

As CryptoGlobe covered, Visa’s chief financial officer, Vasant Prabhu, has earlier this year argued bitcoin investors have “no idea what they are doing,” as he expressed concern over the potential use of cryptocurrencies for criminal activities. Visa itself is reportedly experimenting with blockchain technology.

How Bakkt Can Bring the Crypto Space an Institutional Investor Influx

Cryptocurrency enthusiasts have for years been waiting for institutional investors to enter the space. While the introduction of bitcoin futures contracts on regulated exchanges in late 2017 didn’t gain a lot of traction, but Bakkt may.

Bakkt is a long-awaited bitcoin futures exchange and on-boarding platform from the Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange – and it’s set to launch this year. Bakkt itself has remained tight-lipped over the precise launch date after delaying its launch last year, with ICE CEO Jeff Sprecher in February simply saying “later this year.”

It’s possible that this quarter may see the launch or at least more news about when the exchange is finally coming. At the end of March, Bakkt CEO Kelly Loeffler explained:

While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for bitcoin to the U.S.

Bakkt’s launch could be a major milestone for the cryptoasset industry. A venture backed by Microsoft and Starbucks, its institutional pedigree alone will switch many cautious investors on. Specifically, the firm is set to help consumers pay for goods and services with cryptocurrencies, with Starbucks being the flagship retailer in its arsenal.

Bakkt’s Bitcoin futures contracts will be the first physically-settled derivatives on a regulated trading platform. This means investors will receive the contract’s underlying asset, bitcoin, when it expires.

Currently the Chicago Mercantile Exchange (CME) offers cash-settled bitcoin futures contracts, meaning investors get the equivalent of BTC’s value in fiat when the contracts expire. This is seen by some as a major development in the cryptocurrency space, as it shows traditional finance is willing to interact with the nascent cryptoasset industry.

It’s worth noting that earlier this year the ICE’s CEO called Bakkt a “bit of a moonshot bet,”  as it was organized in a way “very different than the way ICE typically does business.” The firm has its own offices and management team, and could undergo more rounds of financing in the future.

Bakkt And a Potential Bitcoin ETF

What’s significant about Bakkt’s launch beyond this, is that it may bolster the chances of a Bitcoin Exchange-Traded fund (ETF) being approved. Such a product would make it easier for institutional investors to gain exposure to cryptocurrencies.

In August, the US Securities and Exchange Commission (SEC) rejected nine other ETF applications, in particular highlighting how those applying hadn’t provided evidence that “bitcoin futures markets are of significant size’” for an ETF to be launched.

Once Bakkt is launched its trading volumes may very well help quell the SEC’s concerns over the bitcoin futures markets’ small size as institutions and other investors may feel comfortable entering it. Larger futures contracts trading volume, increased liquidity and a well-established company involved may prove enough to convince the SEC that the time is right for a Bitcoin ETF.

Bakkt therefore represents a very significant milestone for a maturing cryptoasset industry and may well herald the “institutional influx” that many have been anticipating since 2017. Despite the markets remaining relatively flat throughout 2019 these looming decisions in the U.S. have the power to move the entire industry forward, for better or worse.