The company exclusively disclosed to CNBC that Mastercard will release new tools on Tuesday to help banks recognize and prevent transfers from rogue cryptocurrency exchanges.
Employing “advanced” artificial intelligence algorithms, the Crypto Secure system evaluates the risk of illegal behavior associated to bitcoin exchanges on the Mastercard payment network.
The system uses data from several sources, such as the blockchain, a public database of crypto assets.
The service is powered by CipherTrace, an online security provider that Mastercard acquired last year. Investigating illicit crypto transactions is made easier by CipherTrace, a Menlo Park, California-based startup.
The companies, Chainalysis in New York and Elliptic in London, are its main rivals. Mastercard is introducing the solution in response to an uptick in criminal activity in the developing digital asset sector.
A framework on the Crypto Secure platform is provided to banks as well as other card companies with color-coded grades for the probability of unusual conduct, with red indicating “high” risk and green indicating “low.”
To prevent fraud in transactions involving fiat currency, Mastercard currently employs a similar mechanism. With the aid of Crypto Secure, it is expanding this functionality to include bitcoin and other digital currencies.
Crypto Secure does not choose which crypto merchants to accept or reject. That decision is left to the card issuers.
In spite of decreasing prices and declining volume, the biggest payments business in the world is increasing its cryptocurrency investments.
The market in its entirety has lost $2 trillion in value since the peak of a big increase in November 2021.
The use of alias by users on blockchain networks contributes to the issue of cryptocurrency being occasionally accused of being used in financial fraud and other criminal activities.
However, the development of new advanced technologies has made it easier to locate the illegal proceeds of bitcoin criminals.
Modern machine learning and data science techniques are being used by businesses to analyze data on open blockchains.
Furthermore, Mastercard is trying to keep up with Visa, its main competition, which has also made large investments in the bitcoin business.
During the first fiscal quarter of 2022, according to a study from Visa, the business permitted $2.5 billion in transactions using cards linked to accounts at cryptocurrency exchanges.
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