Credit cards could include cryptocurrencies as collateral, suggests Visa

• Credit cards could include cryptocurrencies as collateral, suggests Visa.
• Visa highlights that there are opportunities for individuals and institutional investors.

The financial services giant Visa considers that generating yield from self-custodied digital assets represents an expanding market opportunity.

Through next-generation credit programs and on-chain finance protocols, users can maintain sovereignty over their assets while accessing liquidity.

In its latest on-chain finance report, prepared in conjunction with the analysis firm Allium, Visa highlights how users of self-custody wallets, such as Ledger and Trust Wallet, are already participating in global lending markets.

According to the document, certain protocols help to “replace traditional bilateral or tripartite loan relationship networks with a single multilateral lending market”.

This lending model, which connects liquidity in a decentralized manner, improves efficiency and interest rates compared to traditional systems.

The integration of these services directly into wallet applications is key, as “offering financial services within the app gives users fewer reasons to move their assets elsewhere and allows them to borrow instead of selling them.”

Looking ahead, the report states that “credit card programs could soon expand to include digital asset guarantees, opening new market opportunities.”

Emerging programs already allow users to “access liquidity by borrowing against their holdings of digital assets while maintaining ownership of them, avoiding capital gains taxes and preserving exposure to their potential upside.”

According to Visa's vision, this infrastructure not only benefits retail users. It also “creates new performance opportunities for institutional investors while reducing counterparty risk through transparent and automated collateral management.” In this way, banks and credit funds could act as liquidity providers for these innovative credit programs.