Mastercard’s Big Bet on Crypto: Moving Beyond Stablecoins
Mastercard, a global payments giant, is making a big move into the world of blockchain and crypto. But unlike many others in the space, the company isn’t putting all its chips on stablecoins. Instead, Mastercard is working on new ways to connect traditional banking systems with blockchain technology, aiming to bring the benefits of crypto to more people—without relying heavily on stablecoins.
MetaMask and Mastercard Join Forces
Earlier this week, Mastercard announced a new partnership with MetaMask, one of the most popular crypto wallets for Ethereum users. Together, they launched a debit card that allows people to spend their crypto at any store or website that accepts Mastercard. This means that people can now use their Ethereum wallet to make purchases in everyday life.
Raj Dhamodharan, Mastercard’s head of crypto and blockchain, explained the significance of this move: “We’re opening up this crypto purchase power to our 100 million-plus acceptance locations. If consumers want to buy into it, if they want to be able to use it, we want to enable that—in a safe way.”
However, not all cryptocurrencies are compatible with this new MetaMask card. Only stablecoins like USDT and USDC, as well as wrapped Ethereum, can be used. This decision reflects Mastercard’s cautious approach to crypto, prioritizing safety and reliability.
Stablecoins: A Bridge Between Traditional Finance and Blockchain
Stablecoins have become a popular way to link traditional financial systems with blockchain technology. These digital currencies are pegged to the value of fiat money, like the US dollar, which makes them stable compared to other cryptocurrencies. As blockchain and traditional banking become more connected, stablecoins are often seen as a reliable way to move money between the two worlds.
But despite their popularity, Mastercard is not convinced that stablecoins should be at the center of the crypto revolution. Dhamodharan emphasized this point: “We can’t just say that everything needs to be converted into prepaid stablecoins before it can power commerce. That seems like a big hurdle that the industry is setting itself up for.”
Mastercard’s Vision: Moving Beyond Stablecoins
Instead of relying solely on stablecoins, Mastercard is working on creating an alternative system. This system would allow traditional banks to remain at the center of the new digital economy. Rather than giving crypto companies like Circle and Tether all the control, Mastercard wants to keep payment services and banks as key players.
One of the key parts of this plan is making bank deposits available on blockchain systems. Today, bank deposits are already digital, but they don’t exist on the blockchain. Dhamodharan estimates that there are around $15 trillion worth of digital bank deposits in the United States alone. Mastercard’s goal is to bring these deposits on-chain, making them usable for purchases and other transactions within the crypto ecosystem.
The Multi-Token Network: A New Way to Tokenize Bank Deposits
Last summer, Mastercard introduced a program called the Multi-Token Network (MTN). This network allows bank deposits to symbolically exist on the blockchain without requiring banks to fully integrate with Ethereum or other blockchain systems. For example, Bank of America wouldn’t need to change its current systems to use the blockchain through MTN.
In May, Mastercard launched its first pilot program using MTN to tokenize carbon credits in Hong Kong. This move demonstrates the potential of the Multi-Token Network to handle real-world assets on the blockchain, opening up new opportunities for both businesses and consumers.
The Future of Real-World Assets on Blockchain
Mastercard believes that in the coming years, many real-world assets like real estate and commodities will become digital and live on the blockchain. This transition could unlock trillions of dollars in value for the digital economy. However, for this to happen, individuals and institutions need easy access to funds that they can use in this new financial landscape.
Crypto companies have been racing to build systems that can handle the massive amount of commerce expected in the future. But Mastercard is betting that people won’t want to deal with complicated new currencies or third parties when making big purchases, like buying a house. Instead, they want to make sure that traditional financial systems—supported by blockchain technology—remain at the core of these transactions.
As Dhamodharan put it, “It drives our economies today. And there’s a current regulatory framework that drives that—one we’ve already come to depend on.”
Mastercard’s Crypto Credential: Simplifying Crypto Payments
Another major initiative from Mastercard is the Crypto Credential service. This new service, which recently launched, aims to make peer-to-peer crypto payments easier and more secure. It gives users a simple Mastercard alias, which they can use to send and receive crypto through popular exchanges like Bit2Me and Mercado Bitcoin.
The service is currently available in several European and Latin American countries, including Brazil, Argentina, and France. By simplifying the process of sending and receiving crypto, Mastercard hopes to encourage more people to use digital currencies for everyday transactions.
Tokenizing Assets for the Future
In addition to making crypto payments easier, Mastercard is also focused on tokenizing assets on the blockchain. Tokenization involves converting real-world assets, like property or carbon credits, into digital tokens that can be traded on the blockchain. This process makes it easier to buy, sell, and transfer ownership of these assets, unlocking new possibilities for commerce.
Mastercard’s pilot programs in Hong Kong are just the beginning. The company plans to expand its tokenization efforts to other areas, including real estate and commodities. By doing so, Mastercard aims to create a more efficient and accessible financial system that benefits both businesses and consumers.
Where to From Here
Mastercard’s bold move into the crypto space reflects its commitment to innovation and staying ahead of the curve. By partnering with MetaMask, launching the Multi-Token Network, and introducing the Crypto Credential service, Mastercard is positioning itself as a leader in the intersection of traditional finance and blockchain technology.
While the company is cautious about stablecoins, it is determined to find new ways to bring the benefits of blockchain to the masses. With its focus on safety, security, and usability, Mastercard is setting the stage for a future where real-world assets and digital currencies coexist seamlessly on the blockchain.
As the world moves toward a digital economy, Mastercard’s efforts could help bridge the gap between traditional finance and the new world of blockchain. Whether it’s through tokenizing assets or making crypto payments more accessible, Mastercard is betting big on the future of digital commerce.
