Mastercard is all-in on blockchain. The payments giant launched earlier this week launched a debit card with MetaMask that allows holders to spend self-custody tokens at any store or location where Mastercard is accepted (see: almost everywhere).
“We are opening up this crypto purchasing power to our more than 100 million acceptance locations,” said Raj Dhamodharan, head of crypto and blockchain at Mastercard. Declutter. “If consumers want to buy it, if they want to be able to use it, we want to make that possible – in a safe way.”
Perhaps for security reasons, the new MetaMask card is not compatible with most cryptocurrencies. You cannot buy a plane ticket with it Pepecoinor a sandwich with SHIB. The card is only compatible with the dominant stablecoins USDT and USDC packed ether.
As traditional financial systems and blockchain technology become increasingly intertwined, so do stablecoins pinned down at the price of fiat money held in reserve – have risen in popularity as a firm tool connecting off-chain and on-chain worlds.
But while Mastercard is confident that traditional finance is ready to move up the chain, the company’s leadership is skeptical that stablecoins should be at the forefront of that transition.
“We can’t just say that everything has to be converted into prepaid stablecoins before it can stimulate trading,” Dhamodharan said. “That seems like a big hurdle that the industry is setting itself up for.”
Dhamodharan and his team are currently trying to create an alternative system to stablecoins that – instead of crypto companies like Circle And Tether in the catbird seat of the new digital economy – keeps payment services like Mastercard and traditional banks front and center.
The key to this plan is unlocking the potential of bank deposits, which already exist on digital ledgers, but not on-chain deposits. Dhamodharan estimates that there are currently approximately $15 trillion in digital bank deposits in the United States alone.
Last summer Mastercard first announced a program, the Multi-Token Network (MTN), that would symbolically allow bank deposits to exist on-chain and power trading, without requiring, for example, Bank of America to integrate Ethereum with its internal systems. In May, the company launched its first pilot program of the system, to tokenize carbon credits in Hong Kong.
“I don’t expect your bank deposits and mine to become public assets,” Dhamodharan said. “But they should be able to be used to purchase assets that may be in a public chain.”
Mastercard expects that in the coming years real possessions such as real estate and commodities are ready to go digital and live in the chain. Such a transition could unlock trillions of dollars in value for digital economies – but only if individuals and institutions around the world have easy access to funds to leverage in this new financial frontier.
Crypto companies, which are leading the way, have been racing for several years now to build on-chain systems that can handle the flood of commerce when the masses eventually come. But Mastercard calculates that these masses – even if they one day buy their homes with smart contracts – may not want to deal with newfangled currencies and additional third parties.
“It drives our economies today,” Dhamodharan said of the traditional banking system. “And there is a current regulatory framework that ensures that – a framework that we have already become dependent on.”
“It’s just not taking advantage of the benefits of technology right now,” he added, “that we think we can solve.”