Bitcoin + MasterCard: 'Everywhere You Shouldn't Be?'

Created in January of 2009, Bitcoin is an experimental digital currency that enables instant payments to anyone, anywhere in the world. Given its relatively anonymous nature, Bitcoins have been linked to e-commerce transactions involving illegal drugs, porn, and poker, among other things.

What’s today’s big news? BitInstant says it is close to launching the first internationally accepted Bitcoin-funded debit card with partners of MasterCard. If true, Bitcoins may become ubiquitous, their value could appreciate, and those trading in the black market may have a new way to launder money.

BitInstant’s Statement

According BitInstant, “We are moving forward and the arrangement with MasterCard will be handled in due time at the proper stage of the process by the partners who work directly with that company.”

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“BitInstant’s partners, who are issuing the card, have been working with MasterCard for many years, and the specific relationship will be between these partners and MasterCard (not directly between MasterCard and BitInstant)”. American Express, Visa, PayPal and Discover are not being named as potential partners.


“All balances for the purposes of the card will be held and collateralized in USD (or the cardholder’s native currency)”, said the BitInstant Team. “BitInstant will fund the cards in USD, after receiving a user’s Bitcoins. These will not be ‘anonymous’ debit cards, but rather a highly convenient means for verified customers to spend Bitcoin value around the world.”

MasterCard’s Statement

According to Jim Issokson, Senior Business Leader Public Affairs and Corporate Communications of MasterCard Worldwide, “MasterCard has no relationship with BitInstant. There are issuers who allow the conversion of Bitcoins to US dollars and other currencies, delivered on prepaid cards. However, we’re not aware of this particular program from BitInstant.”

More About Bitcoin

One  Bitcoin currently sells for $250.00 USD. Bitcoin is also the name of the open source software which enables the use of this currency. The software uses peer-to-peer technology to operate with no central authority: managing transactions and issuing money are carried out collectively by the network.

How Could Bitcoin Debit Cards Be A Mechanism For Money Laundering?

Let’s consider the case of Silk Road, which is an anonymous (e-commerce) black market that uses only Bitcoins as currency. In a 2011 letter to Attorney General Eric Holder and the Drug Enforcement Administration, Senators Charles Schumer of New York and Joe Manchin of West Virginia called for an investigation into Bitcoin and Silk Road. Schumer described the use of Bitcoins at Silk Road as a form of money laundering.

How to buy dogecoin

Intuitively it strikes me that a BitInstant (MasterCard) Paycard would reduce the “frictional cost” of converting illegal Bitcoin profits from the likes of Silk Road, into traditional currency. Interestingly some of the largest daily Bitcoin transactions now average $250,000,000,00 USD.