Last Updated on October 4, 2022 by Bitfinsider
Mastercard will launch a new piece of software on Tuesday that will assist banks in identifying and blocking transactions from fraudulent cryptocurrency exchanges.
The system, known as Crypto Secure, employs “sophisticated” artificial intelligence algorithms to assess the risk of crime associated with cryptocurrency exchanges on the Mastercard payment network. Data from the blockchain, a public record of crypto transactions, as well as other sources, are used by the system.
CipherTrace, a blockchain security startup acquired by Mastercard last year, powers the service. CipherTrace, based in Menlo Park, California, assists businesses and government agencies in investigating illicit cryptocurrency transactions. Its main competitors are the New York-based Chainalysis and the London-based Elliptic.
Mastercard is launching the service in the midst of rising crime in the fledgling digital asset market. According to data from blockchain analytics firm Chainalysis, the amount of cryptocurrency entering wallets with known criminal connections reached a record $14 billion last year. And 2022 has seen a rash of high-profile hacks and scams aimed at cryptocurrency investors.
Banks and other card issuers are shown a dashboard with color-coded ratings representing the risk of suspicious activity on the Crypto Secure platform, with severity of risk ranging from red for “high” to green for “low.”
Crypto Secure does not make a decision on whether to reject a specific crypto merchant. It is up to the card companies to make that decision.
Mastercard already employs comparable technology to combat fraud in fiat currency transactions. It is extending such functionality to bitcoin and other virtual currencies with Crypto Secure.
Mastercard’s president of cyber and intelligence business, Ajay Bhalla, stated that the move was made to ensure that its partners can “stay compliant with the complex regulatory landscape.”
“The idea is that we want to be able to provide the same level of trust for digital asset transactions for consumers, banks, and merchants that we do for digital commerce transactions.”
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