Mastercard is set to launch a new tool called Crypto Secure that will allow banks to recognize fraudulent activity related to crypto-currency exchanges on its payment network.
Crypto Secure was built by CipherTrace, a blockchain-related security startup acquired by Mastercard in 2021. This will use an AI algorithm to examine crypto fraud and illicit behavior from a blockchain of crypto transactions.
According to Ajay Bhalla, president of Mastercard’s cyber and intelligence business, the company wants to extend the same kind of security and trust to the virtual asset space as it has in the digital commerce transaction industry.
The newly launched software will allow banks to not only identify but also reverse transactions from vulnerable cryptographic exchanges. CipherTrace, which was a Menlo Park, California-based startup before it was acquired by Mastercard, allows businesses and government agencies to examine illegal money transfer that involves cryptocurrencies. Its main competitors in this sector are Chainalysis and Elliptic.
Mastercard is introducing the service as criminal activity increases in the nascent phase of the virtual asset industry. About 14 billion USD have been illegally transferred through wallets.
On Mastercard’s secure crypto platform, authorities are presented with a dashboard with scores signifying the risk of illicit activity. While Mastercard already relies on similar technology to protect against fraud in currency exchanges, it will now be extended for use in transactions with bitcoin and other virtual assets.
With this new software, it is now easy for authorities to track down crypto criminals and employ intelligent data science and machine learning algorithms to evaluate and identify exceptions in public blockchain data. Mastercard is also competing with its competitor Visa, which has itself made significant investments in the crypto-currency sector. In its first fiscal year of 2022, Visa had claimed to allow $2.5 billion in money transfers from cards associated with an account on a crypto-currency exchange. A year earlier, Visa had introduced its crypto advisory procedure to provide suggestions to customers on topics such as deploying crypto features to analyze NFTs.
Meanwhile, governments around the world are looking for new regulations to impose restrictions on the crypto industry, which was not widespread until now. Recently, the Biden administration revealed its first policy framework on regulating crypto exchanges in the United States.