$CRO Tumbles After Crypto.com Slashes Credit Card Rewards

The era of easy money has come to a close — and nowhere is that more obvious than in traditional markets, where major indexes have posted double-digit losses YTD. Right now, discourse about “interest rates” and “monetary policy” are all the rage.

Some of that has boiled over to the world of crypto, with coins like Bitcoin — and consequently, the rest of the crypto market — tracking the ebbs and flows of the S&P 500 and Nasdaq. However, given concerns about recession and the “end of easy money”, crypto companies appear to be scaling back their ambitious spending. 

crypto.com, which shelled out $700 million in November 2021 to acquire the naming rights for the Staples Center, announced sweeping changes to one of its most valuable consumer-facing products: its credit card. The company offered several different tiers of their card, which could be unlocked by staking the crypto exchange’s token, $CRO. This weekend, those rewards on the various tiers ranged from 1% to 8%.

By staking more $CRO, and unlocking higher-tiered cards, you would also unlock higher reward tiers and cashback — some even offered reimbursements on purchases at Netflix, Amazon Prime, Expedia, and Airbnb among other “premium” benefits.

Those premium benefits and sky-high cashback figures (which were, of course, paid in $CRO) were initially a huge draw for high net worth users willing to dabble in cryptocurrency. However, this weekend, crypto.com made sweeping changes to its fancy VISA Metal Credit Cards. They are already very unpopular.

Effective Jun. 1, 2022, crypto.com will massively reduce card rewards across the board. The lowest tier cards will receive virtually no card rewards and see a “rewards cap” imposed on the card. The higher-tiered “Icy White/Frosted Rose Gold” and “Obsidian” cards, which require users to stake $40,000 USD and $400,000 USD of $CRO to unlock them, will see rewards of no more than 5%.

In a r/CreditCards thread pertaining to the “slashed rewards”, cardholders and onlookers discussed the gravity of the move. One user, u/kinuipanui123 put it best when he said, “They just killed themselves with this.” Others remarked how the cards were “worthless” after the changes. In many ways, they’re right: the credit card space is an extremely competitive one, and reward reductions like this are extremely unpopular with cardholders.

Enter: the exodus.

In the aftermath of the announcement, the crypto.com coin ($CRO) fell more than 10% as people redeemed their tokens. Now, after two days and some change, the exchange’s crypto has lost over 32% of its value. Picture that… or well, you don’t have to… because we got you this lovely chart to paint the picture:

Those four consecutive red candles are the latest nail in the coffin for crypto.com coin, which has been in decline since it peaked in November 2021. It’s down more than -73% since it peaked on Nov. 24, 2021… and there’s little evidence that the credit card-related selling will stop here.

Ultimately, the reduction in rewards points to a number of pain points for crypto.com, but also for the broader industry: fintechs and crypto companies don’t have access to the same unlimited VC money, and with both traditional and untraditional markets no longer “printing” for retail investors, these companies are facing broad slowdowns in YoY growth. Unfortunately for many companies, YoY growth in Q1 2022 will be upside down (or to the tune of low single-digit growth.) However, seeing as though this once high-flying and ambitious consumer brand has come to heel on one of its most costly products, it’s unlikely that they’ll be the only ones peeling back the tape and spend in their marketing and acquisition departments. It’s a shame, but it’s a given for an industry and space that has grown so fast, spent so much, and can’t keep pace.

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