DeFi
Israeli fintech Kima and Mastercard Lab collaborate to develop a “DeFi credit card”
Israeli fintech company Kima and Mastercard’s FinSec Innovation Lab have launched a project to connect decentralized finance (DeFi) tools with traditional financial services, including credit cards and bank accounts. The effort, supported by the Israel Innovation Authority, aims to bring the concept of a “DeFi credit card” to fruition.
Extension of the Kima blockchain
Kima, a peer-to-peer money transfer and payment protocol, operates a blockchain that does not use smart contracts, which it describes on its website as “buggy and experimental.” The company plans to expand its existing protocol and launch a mainnet and token by Q2 2024. FinSec will play an important role in this initiative by operating a Kima node and becoming a key shareholder of the network.
Supported by the Israeli National Directorate of Cybersecurity, the Ministry of Finance and the Innovation Authority, FinSec collaborates with fintech and cybersecurity startups. The partnership with Kima, announced in July 2023, focuses on creating a bridge between DeFi and traditional finance, aiming to help users overcome technical and regulatory barriers to DeFi adoption.
Eitan Katz, co-founder and CEO of Kima, highlighted the importance of accessibility and security in the adoption of blockchain and DeFi technologies. According to Katz, these technologies will only gain traction outside of the niche world of Web3 if there is a secure, affordable, and easily accessible way to integrate blockchain networks with traditional financial systems. Kima has grown rapidly, announcing six integrations and 18 new partnerships in 2024, including projects in Vietnam and Thailand. The company also joined artificial intelligence protocol incubator ChatGPT, using AI in its liquidity management algorithm.
source: official X profile of Kima Network
Mastercard’s blockchain initiatives
Mastercard, meanwhile, is advancing its blockchain initiatives through various collaborations and projects aimed at integrating blockchain technology into traditional financial services. Recently, Mastercard partnered with major US banks including Citigroup, Visa and JPMorgan to test distributed ledger technology for bank settlements using tokenization.
This collaboration aims to explore the potential of a shared ledger technology called Regulated Settlement Network (RSN), which allows tokenized assets such as Treasury bills, investment grade debt instruments and commercial bank money to ‘be regulated collectively on a single platform. This initiative is expected to improve the efficiency and security of financial transactions by leveraging blockchain to modernize banking infrastructure.
In Europe, Nexo, a leading DeFi platform, has launched a new crypto Mastercard for citizens of the European Economic Area (EEA). This innovative card allows users to directly spend their cryptocurrency holdings, with automatic conversion to fiat currency for payments. The launch of this card highlights the growing integration of cryptocurrency into everyday financial activities, providing consumers with a seamless way to use their digital assets. The partnership between Nexo and Mastercard represents an important step towards the integration of crypto-based financial products.
Innovation in Central Bank Digital Currencies (CBDCs)
Additionally, Mastercard is driving innovation in central bank digital currencies (CBDCs) through a collaboration program involving prominent blockchain companies such as Ripple and ConsenSys. This program is designed to explore and promote the development of CBDCs, providing a platform for various stakeholders to research and develop secure and efficient digital currency solutions.
By engaging industry leaders in blockchain technology, Mastercard aims to address both the potential benefits and challenges associated with CBDCs, paving the way for their wider adoption and implementation.
These initiatives underscore Mastercard’s commitment to leveraging blockchain technology to improve financial services, improve transaction security and promote the adoption of digital currencies. Through strategic partnerships and innovative projects, Mastercard is positioning itself at the forefront of blockchain integration in the financial sector.