Disappointing Changes to the Crypto.com Visa Card

Crypto.com has announced that they will be making changes to the Crypto.com Visa Card and other products, reducing rewards across the board. These changes will come into effect on June 1, 2022.

Let’s break down the bad news as we consider the future value of the Crypto.com ecosystem.

Reduction of CRO Card Rewards

Rewards on everyday spending will be going down significantly. Here’s a summary of the changes for cardholders with an active CRO stake:

There’s next to no value in using a Midnight Blue or Ruby Steel card for purchases. The higher tiers remain acceptable, but they’ve been slashed from their previous industry-leading levels to rates that are more in line with other credit cards.

The cuts have been so severe that Crypto.com was prompted to backpedal slightly after immense user backlash.

If you’ve recently staked for a new card or tier, you’ll continue to earn the old rates until your six-month lock-up period ends. Effective immediately, a new six-month stake won’t grandfather you into the old rates. Members with an active stake who are past their lock-up period will also be subject to the new rates immediately on June 1.

New Cap on CRO Card Rewards

Additionally, a monthly cap will be introduced, limiting the number of rewards you can earn with a lower-tier card. The caps will reset every calendar month at midnight UTC.

• Ruby Steel cardholders will be capped at US$25 in rewards (paid in CRO), equivalent to US$2,500 spent with a return on spend of 1%
• Royal Indigo / Jade Green cardholders will be capped at US$50 in rewards, equivalent to US$2,500 spent with a return on spend of 2%

Rebates on card benefits, such as Spotify and Netflix credits, don’t count towards these caps.

The lowest-tier Midnight Blue cardholders don’t earn any rewards on spending. Meanwhile, the higher tiers of Icy White / Frosted Rose Gold and Obsidian will remain uncapped.

Reduction of Card Stake Rewards

After backpedaling on the decision to eliminate stake rewards entirely, the rewards earned on your CRO stake will be reduced instead:

Cardholders will continue to earn rewards akin to a dividend on the amount of CRO that must be locked up in order to access and maintain their card tier.

Going forward, fewer rewards will be earned on this balance. This introduces a significant opportunity cost to the sizeable sums required to buy into the higher tiers.

Existing six-month stakes, and any new stakes made before May 31, will be protected at the old rates until they expire.

What’s Next for Crypto.com?

Frankly, this shouldn’t be a surprise. Simply put, the old rates were too good to be true.

In short, credit card rewards are higher in North America than elsewhere around the world because it costs merchants more to process credit card payments here. The old earn rates were exceedingly high compared to global rewards rates – the card proved immensely popular in markets where rewards are hard to earn by other means, but it must have cost a fortune for Crypto.com to operate.

Crypto.com has also set a precedent of making these types of changes. This announcement comes on the heels of recent changes to Crypto Earn, where they’ve introduced tiered rewards rates as a progressive tax of sorts.

I suspect a lot of Royal Indigo / Jade Green cardholders were easily able to upgrade into the Icy White / Frosted Rose Gold tier. With unlimited rewards on spending at a generous 3%, and the rising value of CRO during the recent bull run, there was a window of opportunity for many to take a modest upfront investment and parlay it into an even more powerful product.

The reduction and cap on rewards makes it much more difficult for mid-tier members to graduate into the high tier. This ought to limit Crypto.com’s costs, as the distribution of members more closely aligns with their projections for sustainable growth.

Overall, Crypto.com’s strategy has been consistent, as they’ve made a series of changes to discourage whales from accumulating CRO. They’re trying to strike a balance between increasing the value of the token while seeing its utility grow.

I get the sense that Crypto.com would rather see its products used by an enormous audience of small fish. As they strive to be synonymous with cryptocurrency, it does them no good if the big fish get too big. If tokens aren’t in circulation, they can’t power their innovative modern fintech platforms.

I don’t see any of these changes as a reflection of the cryptocurrency market. Instead, it strikes me as the natural progression of a young company dangling tantalizing incentives as an aggressive marketing push, then stabilizing its offerings after its membership has grown. (We’ve seen it countless times before with credit cards and loyalty programs.)

Whether that membership remains loyal depends on if they continue to offer value and maintain trust.

What’s Next for Crypto.com’s Users?

As an existing Jade Green cardholder, I’m happy to keep using my Crypto.com Visa Card for foreign transactions and ATM withdrawals. However, for prospective new cardholders, it certainly complicates the decision to stake CA$5,000 worth of CRO to achieve the tier that earns 2% rewards in a volatile asset.

You could earn the same rate of return with no foreign transaction fees with the HSBC World Elite Mastercard. You’ll lose the Spotify and Netflix rebates, but you’ll get a valuable signup bonus and comprehensive travel insurance, without the need for a risky up-front investment.

Meanwhile, I’m continuing to use Crypto Earn for double-digit guaranteed returns on stablecoins and other tokens, which I still believe is the easiest way to get incredible value out of Crypto.com. However, since the throttled earn rates came into play in April 2022, I’ve considered diversifying the platforms I use in an effort to optimize my returns.

Personally, while I still have confidence in CRO as a long-term investment, what excites me about Crypto.com is its utility. Unfortunately, that side of the equation has been gutted.

Before, I was interested in accumulating CRO to upgrade my stake to a tier that offers higher utility. Now, though, I’m not so sure if it will be worth the effort or opportunity cost, given how much more difficult it is to achieve, and the likelihood that those benefits may not be sustainable by the time I reach a higher tier.

Conclusion

Let’s not mince words: all of these changes to the Crypto.com Visa Card are negative. Most product devaluations are at least masked with some positive spin, but here there’s no silver lining whatsoever.

If there’s any consolation, the card’s earn rates are still decent at the Royal Indigo / Jade Green tier and above. But in a competitive North American credit card market, Crypto.com will need to do something to set its product apart.

Unfortunately for credit card enthusiasts, that doesn’t seem to be Crypto.com’s objective. Instead, I’d encourage you to look for other ways to get value out of the Crypto.com platform.