- Crypto debit card providers are in limbo after Wirecard filed for insolvency
- The company owns Wirecard Card Solutions, who provide prepaid cards for many crypto projects
- Not yet known how these facilities will be affected
Crypto debit card providers have been left in limbo following the decision by Wirecard to file for insolvency. The German company, until recently the darling of the German fintech industry, has endured a torrid week after auditor EY refused to sign off on the company’s last accounts, leading to a revelation of a $2 billion hole in the Wirecard’s finances. This has led to Wirecard having no choice but to file for bankruptcy, putting its subsidiary services into doubt, including those that service cryptocurrency card providers.
Crypto.com CEO Moves to Reassure Users
Most debit card providers haven’t commented on the developments except for Crypto.com CEO Kris Marszalek who has kept users up to date on Twitter, explaining yesterday that “fiat funds are safe and guaranteed” but admitted that the situation is still cloudy:
It is not clear at this stage which of the subsidiaries are going to be affected and if any of the services will be interrupted at all.
We will keep everyone up to date as this develops, but I want to make it clear for all our SG and EU card customers that their funds are safe.
— Kris | Crypto.com (@Kris_HK) June 25, 2020
The worry for customers is twofold – firstly they worry that if Wirecard Solutions suffers alongside its parent company then their funds could be at risk, and secondly that their cards, on which they might rely for everyday purchases, could be rendered useless. Wirecard is the provider for Wirex, TenX, and CryptoPay alongside Crypto.com
Crypto Debit Cards Could Lose Their Issuer
While user funds should be safe, as long as companies are putting the proper systems in place, the problem of card issuance could be a bigger one. In Wirecard, crypto companies had found a provider willing to take the ‘risk’ of association with cryptocurrency companies, but were Wirecard Solutions to fold then these companies would be forced back to the drawing board to find another issuer, much as they were when Wavecrest was denied its card issuing license by Visa in 2018.
Crypto debit card providers will therefore be desperately hoping that Wirecard Solutions can survive, either on its own or under another company, or we could see the space take a huge step backwards.