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Source: Pixabay @Akuptsova

Digital Assets Are on the Rise and MasterCard Joins in With USDC

Alyssa Exposito - Author

Jul. 21 2021, Published 3:40 p.m. ET

In line with a history of leaning into emerging tech to advance cash displacement and financial inclusion, Mastercard has been working on blockchain-related use cases for several years. Five months after Mastercard said that it planned to bring select stablecoins into its network, it has named the first stablecoin, USD Coin (USDC), to test the means of settling payment. Selecting Circle to facilitate crypto-to-fiat conversions in a pilot program will help cryptocurrency holders spend their digital assets at merchants that accept Mastercard.

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Mastercard’s executive vice president of digital asset and blockchain product, Raj Dhamodharan commented that Mastercard will be making the conversion of cryptocurrency to fiat much easier since many platforms don't have the infrastructure for it. Swapping a cryptocurrency for a stablecoin and then exchanging the stablecoin for dollars is much quicker and simpler than exchanging directly from crypto to fiat. Some digital currencies can't be traded easily on some exchanges for dollars, but they can be traded for USDC.

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Source: Circle
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Mastercard isn't a stranger to cryptocurrency and its services.

Recently, Mastercard supported limited cryptocurrency transactions through its crypto card partners Wirex and Uphold. However, those programs only covered the payment and not the settlement. The coins were converted to fiat currency well before reaching the merchant. Assuming that customers have crypto to spend, Mastercard's initiative promises to upend that dynamic among the store owners and businesses who opt-in.

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Digital assets are shaping economics and innovation. They are becoming an integral form of payment around the world. On the Mastercard network, people aren't just using cards to buy crypto assets. Users are taking advantage of crypto cards to access these assets and convert them to traditional currencies for spending. However, not all cryptocurrencies will be supported. Many cryptocurrencies don't meet Mastercard's requirements regarding compliance measures. Committed to bringing safe, secure, and scalable payments to the network, Mastercard wants to bring that experience to emerging blockchain networks and digital currencies.

The stable coin scrutiny intensifies, but Mastercard understands this venture is a work in progress.

USDC is a digital token that's considered a stablecoin. As a stablecoin that's pegged to the U.S. dollar, it almost always trades at $1 since it guarantees redeeming the currency at a 1:1 ratio. While safer than most cryptocurrencies, the U.S. President’s Working Group for Financial Markets promised to release recommendations for stablecoin regulations. After top federal financial regulators discussed use cases and potential risks, federal officials have more concerns about the growth of stablecoins.

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Although stablecoins aren't regulated, they're becoming more important in our economy. Since stablecoins don't experience the same volatility as other cryptocurrencies, many companies piloting the use of them hope that they can be a vehicle in getting users access to this technology.

Source: Twitter @MastercardNews

Although the roles aren't entirely clear, Evolve Bank & Trust and Paxos Trust Co. are involved in the pilot. Mastercard is in discussions with Evolve and Metropolitan Commercial Bank to issue crypto cards. Mastercard holds the third-largest number of blockchain patents and patent applications. The company firmly believes in the transformative power of blockchain. While thousands of cryptocurrencies don't provide stability, regulatory compliance, and consumer protections, Mastercard hopes that it's moving one step closer to the principles of financial inclusion and global prosperity with this announcement.


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