Mastercard to Incorporate Crypto Assets

Mastercard (MA), a stock traded payment processor with $333 billion in market cap, has announced they are working on directly incorporating crypto assets within their payment network.

“We are preparing right now for the future of crypto and payments, announcing that this year Mastercard will start supporting select cryptocurrencies directly on our network,” said Raj Dhamodharan, Head of Digital Payments at Mastercard.

The company said they’re already working with Wirex and BitPay to create a bitcoin debit card, but now they want to support cryptos directly which they say “will allow many more merchants to accept crypto.”

By crypto they appear to mean stablecoins because they rule out any assets that are used as investment, such as bitcoin.

“To reach our network, crypto assets will need to offer the stability people need in a vehicle for spending, not investment,” they say.

Making this announcement somewhat confusing because it isn’t very clear why someone would go through the trouble of changing their dollars to say USDt to then pay with the latter in a KYC-ed framework.

The payments processor further said they’re working with central banks on so called central bank digital currencies, a somewhat mythical creature as it stands at least in the form talked of currently where the central bank issues a crypto-dollar, something that would make commercial banks obsolete.

A meaningful integration could however be the tokenization of dollars by Mastercard rather than tether, but they already tokenize the dollar in their own form to facilitate digital fiat payments, they just don’t give you the right to hold this token itself and use it only within the banking system.

Therefore our interpretation of what’s going on is that they’ve seen their stock fall while PayPal rises so their marketing department was desperate to announce something, even if it might not make much sense.

One thing that could make sense however is expanding bitcoin card partnerships and perhaps even launching their own or purchasing out a partner.

That can make sense because bitcoin in some ways is desperate for a second layer and the Lightning Network looks unlikely to be it. But a custodian, which can be Mastercard, putting an accounts database over their bitcoin holdings could potentially be such second layer.

That however would require some real innovation and working at the frontier as well as upfront investment which might not pay off, although we think it would pay off because people do now and then sell their coins, sometime for goods and services.

That’s effectively what PayPal is seemingly planning to do with their upcoming rollout of bitcoin payments to merchants, and Stripe might do too with NYDIG, while where Mastercard is concerned, they seem to be tweaking at the edges.

That said, as it stands they’ve effectively announced an announcement, so we’ll have to wait and see what they actually launch.

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