Upstart LVL cryptocurrency exchange is opening pre-orders for a Mastercard debit card linked to bitcoin and fiat accounts. The card is among Mastercard's premium products and can be used anywhere globally, said Chris Slaughter, CEO of LVL.
“It took a couple of months to get Mastercard to be comfortable with connecting to crypto,” Slaughter said. “Convincing them it was in line with their premium service was difficult because their view on cryptocurrencies is that it's transactional business, not member services. We are a subscription service, which is analogous to having a premium card subscription in the Mastercard view. "
LVL approaches traditional banking services
The debit card is part of LVL's goal of bringing traditional banking and cryptocurrencies closer to the average consumer. In November 2020, the company removed trading fees on its platform in favor of a subscription-based service.
Slaughter said he expects the debit card to generate a "substantial portion" of the company's revenue. On most exchanges, cash is held in “for benefit of” (FBO) accounts. These accounts are opened in the name of the company and have sub accounts for individual users.
In contrast, Slaughter said, LVL offers sight deposit accounts that are opened in the customer's name and cannot be vetted by LVL. LVL's back-end bank is Evolve Bank & Trust, a community bank based in West Memphis, Ark., Accessed by the exchange through San Francisco-based fintech firm Synapse. (Synapse offers APIs that allow other companies to add banking services such as checking accounts to their platforms.)
The new crypto exchange debit card trend
"Other companies want to implement crypto debit cards, but LVL is the fastest to market in this field," said Sankaet Pathak, CEO of Synapse. "One feature that people constantly want in the crypto space is the same as seen with E-Trade and Schwab: they want deposit, direct deposit and card issuance functionality linked to their accounts."
In recent months, companies like the peer-to-peer crypto exchange Paxful, the platform of investment Bitpanda and Manhattan-based Quontic bank have launched or announced plans to launch debit cards linked to crypto accounts.
Last month, BlockFi announced plans for a bitcoin (BTC) cashback credit card. “Many of the existing debit cards in the crypto ecosystem are of the kind geared around this idea of spending your cryptocurrencies, which at least BlockFi's customers aren't interested in doing,” said CEO Zack Prince.
