Visa Settles USDC Transaction on Ethereum, Plans Rollout to Partners

Visa Settles USDC Transaction on Ethereum, Plans Rollout to Partners

Bloomberg

(Bloomberg) – A global semiconductor shortage has upended the supply of everyday devices from smartphones to gaming consoles to tech-dependent cars. With companies warning the issue may last into the second half, the fallout threatens to weigh on share prices for months to come.Since news broke in November that Apple Inc. faced a shortage of chips for its latest iPhone, warnings about the impact have been coming thick and fast. Truckmaker Volvo Group and electric-vehicle company Nio Inc. last week joined a long list of auto producers that have idled assembly lines.The lack of chips has been caused by booming demand for tech gear, in large part because of the pandemic, and winter weather in Texas and a fire in Japan have added to the problem. It’s been a boon for companies such as Applied Materials Inc. and Lam Research Corp. that produce the equipment semiconductor makers need to boost output.Here’s a look at the companies with the most at stake as the global chip shortage rages on, and how their stocks have been affected:AutomakersAuto stocks have come roaring back from their pandemic lows. Now both the chip shortage and concern over a resurgence of the coronavirus pandemic have pulled a Bloomberg index of global manufacturers down 14% from its Jan. 25 record high.Volvo Group slumped 7% Tuesday after saying it will have to suspend production due to the lack of semiconductors, while China’s Nio slid 4.8% Friday when it said it will stop output at a factory in Anhui province.A fire March 19 at a Japanese factory operated by Renesas Electronics Corp., one of the biggest makers of automotive chips, hit the industry hard. It triggered a 6.7% drop in General Motors Corp. shares over three days last week. In Japan, shares of Toyota Motor Corp., which touched a six-year high March 18, slumped 6.1% in the subsequent four sessions.“The automotive sector has arguably experienced the greatest level of disruption, with more and more OEMs either slowing production or closing manufacturing plants on a temporary basis,” said Thomas Fitzgerald, a fund manager at EdenTree Investment Management Ltd., referring to original equipment manufacturers.China’s Geely Automobile Holdings Ltd. slid 19% over three days last week after reporting disappointing earnings. Daiwa Securities cited the chip shortage in downgrading the stock and cutting estimates for this year and next. China is dealing with unrelated chip-supply issues of its own.READ, Chip Shortage May Put Market-Beating Rally at Risk: Taking StockSmartphones, Consumer ElectronicsBeyond the auto industry, it’s harder to tease out the stock market impact on companies that depend on semiconductors. Shares of Apple, for example, didn’t react in November to the impact of the shortage, and they’re up more than 5% since then. Smartphone maker Xiaomi Corp. slumped 4.4% Thursday after warning that parts shortages could slow its growth for the next few quarters.One positive aspect of the chip shortage: With demand for consumer electronics as strong as it is, it gives companies the power to raise prices and pass on higher costs, said Neil Campling, an analyst at Mirabaud Securities. “The share prices haven’t reacted particularly negatively to the news, and I think that’s because the important part is that you’re seeing a snapback in demand for these goods,” he said.Lenovo Group Ltd. said in August that its profit margins took a hit from the chip shortage, and in November it said it couldn’t fill all customer orders due to the lack of components. Still, demand for the company’s laptops is soaring because of purchases by people working at home, and the stock has doubled since August.Sony Corp. said last month it might be unable to fully sate demand for its new gaming console in 2021 because of production bottlenecks. The stock touched a 21-year high in February, though it’s dipped 8.2% since then.While Samsung Electronics Co.’s foundry business making chips for other companies benefits from the favorable supply-demand equation, the South Korean firm also has its own line of consumer products that are hurt. Samsung this month warned of problems, including the possible cancellation of the launch of its new Galaxy Note, one of its best-selling smartphone models.Makers of networking equipment also have been feeling the pinch. Analysts at Oddo BHF flagged a DigiTimes report that the lead times for deliveries of networking chips are extending to as long as 50 weeks, suggesting that the chip shortage has also reached the networking segment and will likely last into early next year.ChipmakersWhile automakers have struggled, the flip side of the semiconductor shortage is that the companies supplying those chips could see a boost to their business. Most semiconductor companies should report strong results for the first quarter and give good guidance for the second, said Janardan Menon, an analyst at Liberum Capital Ltd.“This is all great news for the semiconductor vendor,” Liberum’s Menon said by phone. “This kind of tightness – of capacity utilization, rising prices, very, very strong demand – invariably means that their results are very, very strong.”However, Menon cautioned that share prices may not follow, given the market is now worried that the peak of the semiconductor cycle is approaching.European auto chip supplier Infineon Technologies AG is up 12% for the year while STMicroelectronics NV has gained just 5.6%. In the U.S., Texas Instruments Inc. is up 15%, while NXP Semiconductors NV and ON Semiconductor Corp. have done better, up 25% and 24% respectively, versus the Philadelphia Semiconductor Index’s 11% rise.There are also broader winners from the shortages in the semiconductor industry, with chip foundries such as leader Taiwan Semiconductor Manufacturing Co. running at close to full capacity to try to keep up with the surge in demand. TSMC shares are down 12% from their record set Jan. 21 but are still up 11% on the year.Semiconductor-Equipment ManufacturersThe makers of equipment used to produce semiconductors are benefiting from the supply crunch as chipmakers rush to add capacity to their factories and governments concerned about national security risks are looking at measures to encourage local production. The combination has created a spending environment that some analysts say will benefit the industry for years.Applied Materials, the biggest equipment maker, has seen its shares double in the past six months, while Lam Research has gained 77% over the same period, nearly twice the return for the Philadelphia semiconductor index. ASML Holding NV is up 74%.TSMC committed to as much as $28 billion in capital spending in 2021, up from $17 billion the year before, while Intel Corp. unveiled a plan on March 23 to pour billions of dollars into production facilities.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.

Visa Partners with Crypto.com to Allow Fiat Transaction Settlement on Ethereum

Credit card and payments giant, Visa is launching a pilot program that would allow its partners to settle fiat transactions on the Ethereum blockchain. The new program is the result of a collaboration with Crypto.com.

Through the new program, the credit card issuer’s partners will have the ability to exchange USD Coin (USDC) through its payments network. Crypto.com will send USDC to Visa’s Ethereum address as a way of settling some of the transactions that have been sent through Crypto.com’s Visa card program. To facilitate this process, Visa’s treasury will be linked with Anchorage, a federally-chartered crypto bank.

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”Billions of Dollars in Fiat” Are Used to Clear and Settle Transactions on the Visa Network

Visa is seeking to make the system available to Fintech companies and neobanks that deal in cryptocurrency in particular, in USDC, Bitcoin (BTC) and Ether (ETH). According to CoinTelegraph, the company “reports [that] ‘billions of dollars’ in fiat are involved in clearing and settling transactions daily.” The use of the Ethereum blockchain could potentially cut down on some of these costs.

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Jack Forestell, Visa’s Chief Product Officer, said in an announcement that: “crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors.”

“The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency.”

Crypto.com & Visa Announced Their Partnership Earlier This Month

The announcement of the pilot program follows Visa’s announcement that it would be partnering with Crypto.com earlier this month. Through the partnership, Crypto.com is expanding the availability of its cryptocurrency debit card.

When the partnership was launched, Crypto.com said that it would be offering a fiat lending program that would allow cardholders to use their crypto holdings as collateral for fiat loans. These funds can be spent on merchant platforms that support Visa payments.

Visa will settle transactions in USD Coin via the Ethereum blockchain

March 29, 2021 3 min read

This story originally appeared on ValueWalk

Visa Inc (NYSE:V) will start allowing the cryptocurrency USD Coin to be used for payment settlements on its network. It’s the latest sign that mainstream financial companies are starting to accept digital currencies.

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Visa Starts Using USD Coin For Payment Settlements

According to CNBC, Visa launched the pilot program with Crypto.com, a payment and crypto platform. The companies plan to offer the option to use USD Coin to more partners to settle transactions later this year. The USD Coin’s value is pegged to the U.S. dollar.

Mastercard, BlackRock and Bank of New York Mellon have also embraced cryptocurrencies recently, so many have started to speculate that they will become a standard part of investment portfolios soon. Tesla CEO Elon Musk announced last week that customers could use bitcoin to buy their electric vehicles, a key step toward broader use of the cryptocurrency in commerce.

Visa’s crypto chief, Cuy Sheffield, told CNBC that they are seeing growing demand from consumers globally to be able to access, use and hold digital currencies. He also said they are seeing demand from their clients “to be able to build products that provide that access for consumers.”

How the partnership with Crypto.com will work

Previously, when customers chose to use a Crypto.com Visa card to pay for something, the cryptocurrency had to be converted into fiat currency. The cryptocurrency wallet deposits traditional money into a bank account, and it’s then wired to Visa at the end of the day to settle transactions. The process increases costs for businesses and makes things more complicated.

Visa’s new plan will be completed on the Ethereum blockchain. It eliminates the need to convert digital currencies into fiat money for the settlement of the transaction. The credit card company said it partnered with Anchorage, a digital asset bank, to complete the first transaction involving USD Coin this month, using Crypto.com to send the digital currency to Visa’s Ethereum account at Anchorage.

Visa Chief Product Officer Jack Forestell said in a statement that today’s announcement “marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency.”

Anchorage co-founder and President Diogo Monica said in a statement that Visa came to them in 2019 with the idea to “make secure, efficient and seamless settlement payments possible in digital currency.” The payment company wanted to connect its treasury with Anchorage’s custody platform, providing “the next generation of crypto native issuers the option to directly settle with Visa in a digital currency over a public blockchain.”