Nexo, a cryptocurrency lender, announced a partnership with global payments major Mastercard to produce the world’s first “crypto-backed” payment card on Wednesday.
As digital assets grow more widespread, this is the latest step by crypto and traditional financial networks to join together.
Nexo stated that the card, which would initially be offered in a few European nations, will allow users to spend without having to sell their digital assets, such as bitcoin, which are used as collateral to back the credit issued.
The majority of traditional credit cards are unsecured and have a predetermined credit limit.
The card is connected to a Nexo-provided, crypto-backed credit line and can be used at 92 million Mastercard-accepting businesses globally, allowing investors to spend up to 90 percent of the fiat value of their crypto assets, according to Nexo.
There are no minimum repayments, monthly fees, or inactivity penalties with this card. According to Nexo, there are no FX costs for transactions up to 20,000 euros each month.
There are no limits on how much a consumer may spend or remove from an open credit line, and interest is only charged on the amount of credit that is actually used. Customers that maintain a loan-to-value ratio of 20% or less continue to pay 0% interest.
According to Raj Dhamodharan, Mastercard’s head of crypto and blockchain products and partnerships, digital assets are transforming the financial environment.
Nexo’s card is issued by DiPocket, an electronic money company.