All cards? Even for European customers? Mine stopped working, and I need the money, as I am on vacation and my hotel just canceled my booking because of that. What is the problem? Where is the original announcement?
— Daily Startup Idea (@IdeasAreMany) January 5, 2018
How many times have we said it? Cryptocurrencies and anything tied to cryptocurrencies are not yet a reliable means of transacting, precisely because the world isn’t ready to embrace this “revolution.”
The tweet above references an abrupt decision by Visa to cancel its relationship with WaveCrest, a large cryptocurrency card provider. Effectively, WaveCrest allowed crypto-card companies, such as Bitwala, Cryptopay, Wirex and TenX to leverage an existing relationship with Visa to provide card services that converted crypto holdings into cash for prepaid cards.
On Friday, that stopped. As in, the cards are invalid. Period.
“All the cards were shut down in one second,” Wirex’s co-founder Dmitry Lazarichev said before noting that although he’s “asked for more information,” no one is providing any.
As CNBC notes, Wirex “has issued some 500,000 cryptocurrency debit cards to people across the world.”
TenX posted this “urgent” message:
#TenX advisory: Following an urgent communication from our card issuer WaveCrest, payments on the TenX card will be unavailable. We are working on a solution and will let you know further details as soon as we have them. We apologise for the inconvenience.
— TenX (@tenxwallet) January 5, 2018
Here’s FT’s Izabella Kaminska
When it comes to crypto-backed prepaid cards, it’s always been a bit of mystery (to us at least) how they were able to have their cake and eat it with respect to satisfying both AML/KYC terms on source of funds and open-ended access expectations to the payments system, especially in some of the stricter jurisdictions.
Was WaveCrest using its legacy principal issuing agreement in “innovative” ways not anticipated by the main network providers to accommodate crypto prepay cards? Or was it structuring brand new agreements that respected all regulatory conditions and concerns in this field?
A quick reading of any of the T&Cs attached to the cards facilitated by WaveCrest suggests the former.
For their part, Visa said the following:
We can confirm that WaveCrest’s Visa membership is being terminated due to continued non-compliance with our operating rules. All of WaveCrest’s Visa card programmes will be closed as a result.
The incredulous person whose alarmed tweet appears above told CNBC that he “went on vacation” and “put a lot of money” on his card.
That money is now frozen. At least temporarily.
“For all people who use bitcoin for their day to day expenses, it was the only way to do that,” he said.
And the real tragedy: the first place his card was declined was at a bar.
So have a drink tonight for @IdeasAreMany, because when it comes to how he’s going to buy a beer on Friday night, he apparently doesn’t have “many ideas.”