Developed in partnership with Mastercard and the peer-to-peer payment startup DiPocket, the Nexo Card is the first crypto-backed credit card in the European Economic Area (EEA).
“Launching the Nexo Card in Europe with Mastercard and DiPocket as our go-to-market partners is a big milestone for us and the latest proof of the immense synergy potential between the existing financial network and digital assets,” according to the Nexo press release.
Why the EEA?
Although different countries have their own approach to the legalization, distribution, and storage of cryptocurrencies, Europe has the world’s largest crypto economy, collecting $1 trillion in 2020, or 25% of all crypto activity worldwide, according to Chainalysis,
David Henderson, a financial services consultant, and early-stage investor explains, “this represents a growing trend away from the traditional banking models and establishments. Allowing individuals to use their crypto assets as collateral will be seen as a positive step and reinforce the credibility of crypto assets. With no min fees and liquidity at more than 92 million eCommerce sites around the globe, Nexo appears to be going all out.”
In addition, the Nexo Card offers 0% annual percentage rates, has no minimum repayment requirements, and charges no foreign exchange fees up to 20,000 euros ($21,700). With the Nexo Card, customers can choose between a virtual and a physical card, and they can sync their card with Apple Pay and Google Pay.
This credit card can be used to access Nexo’s crypto-backed credit line, which offers the use of a variety of assets as collateral, including Bitcoin, Ether (ETH), and the stablecoin Tether (USDT).
Here is what you get with a Nexo card:
- Up to 2% in Crypto Rewards
- Get up to 2% in crypto rewards on all transactions, paid out in BTC or NEXO.*
- Crypto Credit from 0% APR
- Get instant access to a credit line and borrowing rates starting from 0% APR.**
- No Monthly Fees
- No monthly, annual, or inactivity fees.
- No Minimum Monthly Repayments
- Free Virtual Card – Issue free a virtual card instantly and use it through their app or with the Apple Pay & Google Pay integrations.
- Free ATM Withdrawals
- If you ever need it, the Nexo Card also gives users up to 10 free ATM withdrawals per month with a monthly limit of up to €10,000.
- Zero Fees
- No FX fees for up to €20,000 per month.***
- The card does not sell assets, so it may be a great way to optimize tax liabilities.
What’s unique about the Nexo Card?
“The Nexo Card encourages you to HODL your crypto rather than sell it. This differs from regular cards in the crypto space that sells the equivalent of the amount you spend. Our card functions through Nexo’s crypto-backed credit lines, which means that funds for your purchases come from your available credit line while your digital asset portfolio remains intact.”
“Essentially, you use your crypto as collateral while spending its value at millions of merchants globally, everywhere where Mastercard is accepted. You can use both just a single asset or multiple cryptocurrencies and stablecoins as collateral, enabling you to spend up to 90% of the value of your crypto through the Nexo Card.”
It also allows users to use their crypto as collateral while spending its value at millions of merchants globally, anywhere Mastercard is accepted. They can use both a single asset or multiple cryptocurrencies and stablecoins as collateral, enabling users to spend up to 90% of the value of your crypto through the Nexo Card.
In contrast, a customer can use the credit line in any amount they desire, and interest is charged only on the amounts used from the open credit line. Interest remains at 0% for customers who maintain a loan-to-value ratio of 20% or below; however, users with a lack of financial literacy remain a risk.
Henderson expands on this, “as with all credit arrangements; there is always a risk the individual does not fully understand the terms. Many credit cardholders are still not clear on the rates of interest they are being charged and, as a result, can get themselves into debt and financial difficulties.”
With interest rates attached to the credit individuals are spending, on a rate determined by Nexo’s ‘Loyalty tier’ as with all credit arrangements, users need to be clear that they understand what they are signing up to.
If individuals cannot afford the repayments, they will be forced to sell some of their crypto assets on Nexo with the associated fees. A win-win for Nexo. However, Nexo and any companies offering similar credit arrangements will need to be careful or risk damaging their reputation and the use of cryptocurrency as an asset class.
“It will be fascinating to see how this develops and the longer-term ambitions of Nexo.”
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Helen Femi Williams is a freelance journalist and podcaster interested in fintech, politics, economics, and their intersections.
Prior to this role, she worked as an innovation consultant developing insurtech and fintech products and ideas for brands, startups, and major corporations. She studied International Relations at the University of Nottingham (UK and Malaysia).