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Coinbase to Let NFT Buyers Use Mastercard, Bypassing Crypto (1)

Jan. 18, 2022, 5:10 PM

Coinbase Global Inc. said it will let users make purchases on its planned NFT marketplace through their Mastercard Inc. cards -- without having to own cryptocurrency.

The largest U.S. cryptocurrency exchange announced the partnership with payment giant Mastercard on Tuesday, which aims at simplifying the experience of buying non-fungible tokens, the digital ownership certificates for goods such as art pieces, that have seen soaring popularity in the past year. Coinbase has accumulated more than 2.5 million people on its waitlist for its NFT platform since it announced the plan last October, making it a challenger to leading platforms such as OpenSea.

“Today, if you want to buy an NFT — such as a digital art piece — you first need to open a crypto wallet, buy crypto, then use it to purchase an NFT in an online marketplace,” Mastercard’s Raj Dhamodharan, who leads the company’s digital asset and blockchain partnerships, wrote in a blog post. “We think it should be much easier. That will ensure NFTs can be for everyone.”

Under the partnership, Mastercard will classify NFT as “digital goods,” which will allow cardholders to make NFT purchases through both credit cards and debit cards, a change from the status quo in the U.S. where many crypto purchases are supported with just debit cards.

Buyers will still need a crypto wallet, from Coinbase or elsewhere, to store the NFT after the purchase.

Mastercard has been pushing for crypto integration, saying last year that it would begin allowing cardholders to transact in certain cryptocurrencies on its network. Last October, it inked a deal with Bakkt, the cryptocurrencies firm spun off from Intercontinental Exchange, to facilitate consumers to spend cryptocurrency rewards on their credit and debit cards.

Read More: Coinbase’s Shiba Gamble, NFT Plan Fuel Wall Street Optimism

NFT, one of the hottest corners of crypto that has ballooned to a $44 billion market, has drawn growing interests from retailers and institutions outside of the cryptocurrency industry. Recent trademark filings from Walmart Inc. show the retail giant intends to sell its own collection of NFTs.

The U.S. Internal Revenue Service has also set its sights on the sector. While the rules about taxing tokens aren’t clear, officials who deal with tax evaders have said they are gearing up for a crackdown.

(Adds information on digital wallet use in the fifth paragraph.)

--With assistance from Jenny Surane.

To contact the reporter on this story:
Yueqi Yang in New York at yyang492@bloomberg.net

To contact the editors responsible for this story:
Sally Bakewell at sbakewell1@bloomberg.net

Dave Liedtka

© 2022 Bloomberg L.P. All rights reserved. Used with permission.