Mastercard, one of the well-known multinational financial services cooperation, has recently collaborated with the crypto loan provider Nexo to introduce crypto credit card.
Though Mastercard does not provide with the service to buy cryptocurrencies with its Credit Card, it doesn’t reflect that Mastercard is holding back from the crypto space. The recent launch of the credit card by Nexo is the first-ever crypto credit card that will let the users buy items on loan and then, later on, pay for the stuff.
The co-founder of Nexo, Antoni Trenchev, said that the Nexo Credit Card would offer users to spend the value of their cryptocurrency without really spending it. Furthermore, the card does not deem any monthly, annual, and foreign exchange fees, which makes it more attracting and favorable product for crypto users.
Comparing the Nexo credit card with the likes of Crypterium and TenX that transforms the digital currencies to fiat currencies for each transaction. Whereas, Nexo card would collateralize users crypto and then supply it with a fiat loan at the same amount.
So far, Nexo has lent almost $700 million worth of crypto to over 200K users. Through the money borrowed, users can buy different products at merchants that accept the Mastercard.
Trenchev stated that the card’s issuer has the permit (license) inside the European Economic Area. By the end of this year, Nexo plans to increase its network across different countries, and they are preparing to launch its services across Asia and the U.S.
Nexo in their press release mentioned:
“When using the Nexo Card to purchase goods and services, you actually pay using your Nexo flexible open-ended revolving credit line that is backed with your crypto holdings and thus not selling any of them, which is giving you the freedom to spend today and sell your holdings whenever you want in the future to pay back the loan.”
Once a user takes a loan through the Nexo credit card, while returning the money, they would be charged with about 8-24% interest rate that would be based upon the rules and loan structure.
While repaying their loans, users would be given both options of the fiat and crypto. Using Nexo’s token would decrease the interest rate to a massive 8%.
One significant advantage is that minimum payments will be removed in case the price of Bitcoin rises. This means that users debts would decrease if the collateralized assets escalate respective to the market, which makes the credit line ‘dynamic.’
Nexo acts under the Know Your Customer (KYC) protocol and goes after the international sanctions. Moreover, the blockchain investigators are linked with the crypto firm to inspect any illegal activity through a process called ‘Chainalysis.’ This keeps a proper check and balance in the entire ecosystem.
The Nexo official added that in case if the cryptocurrencies collapse, users would either have to deposit more crypto, pay a part of their loan to reduce exposure, or sell a portion of their collateral to restore the loan-to-value ratio.
Disclaimer: The presented information is subjected to market condition and may include the very own opinion of the author. Please do your ‘very own’ market research before making any investment in cryptocurrencies. Neither the writer nor the publication (TronWeekly.com) holds any responsibility for your financial loss.