Visa CFO: Cryptocurrency speculators are “clueless” and “crooked”
Cryptocurrencies are cutting into the multi-billion dollar prepaid-cards-for-criminals business.
In an interview with the Financial Times, Visa CFO Vasant Prabhu made his opinion on cryptocurrencies, and those who get involved with them, very clear.
He described his encounters with cryptocurrency speculators as "a real shock."
"The people asking me are the ones who scare the hell out of me," he said. "You know, guys like the limo driver to the airport... They have no idea what they are doing... This is the ultimate thing that you hear about when you have a bubble, when the guy shining your shoes tells you what stock to buy," Prabhu said.
"With a currency issued by the Federal Reserve, I know who stands behind it," Prabhu said. But with cryptocurrency, he said, "Who’s good for the money? Who the hell knows?"
He didn't think any more highly of those who use them than those who speculate on it, but did seem to be fully sold on the undeniable effectiveness of cryptocurrency for criminal activities.
"It’s very hard to get dirty money through a banking system," he said. "[But] Cryptocurrency is phenomenal for all that stuff . . . Every crook and every dirty politician in the world, I bet, is in cryptocurrency."
While cryptocurrencies are very effective for criminal activities, it still hasn't experienced as much uptake as more conventional systems like prepaid Visa cards. Interpol estimates that between 3% and 4% of dirty money is now being laundered through cryptocurrencies. The remaining 96-97% is still going through the banking system as cash or on other popular money laundering tools like Visa prepaid cards.
The IRS has declared prepaid cards to be "the currency of criminals" and AUSTRAC has found that Visa prepaid cards are especially favoured by criminals because they can be widely redeemed almost anywhere, rather than at specific shops like traditional gift cards.
On some occasions, Visa has also opposed laws which might make it more difficult to move dirty money through prepaid cards.
For example, Reuters reports that the US Department of Justice estimated in 2009 that $24 billion of dirty money was smuggled from the US into Mexico, some of it on prepaid cards. In 2011, regulators proposed that money on these prepaid cards count towards the $10,000 limit for reporting on cross-border movement.
This proposal was withdrawn in the face of objection from the prepaid card industry who said that it would be unfair to the impoverished and underbanked people who depend on prepaid cards and have legitimate reasons to anonymously carry more than $10,000 across the Mexican border. According to someone who was present, Visa "was the most vocal opponent at the meeting."
Despite Prabhu's objections, bitcoin's completely traceable ledger means smart criminals still prefer to use the almost entirely untraceable alternatives like Monero, Zcash, prepaid Visa cards or Dash.
Overall, Prabhu might have more reasons to object to cryptocurrency than most people. The technology is already disrupting the criminal dirty-money industry, which has previously been an undeniably lucrative niche for Visa and others, and as it becomes more mainstream, it might disrupt other areas too.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.