How Mastercard's crypto strategy is distinct from its new stablecoin plans

Quick Take

  • Mastercard said Wednesday that it will expand its work with digital currencies
  • This notably includes allowing support for stablecoins directly on its network later this year
  • CFO Sachin Mehra provided significant details during an event on Wednesday, per a transcript

The crypto space lit up late Wednesday when news broke that Mastercard was expanding the scope of its digital currency support. 

Mastercard said in a blog post that it was moving to enable its systems to facilitate payments in the form of stablecoins directly to merchants who choose to accept them. Such a service will complement Mastercard's existing crypto card-focused offerings, through which consumers can spend their cryptocurrencies via an issuer's card -- though in the end, the transaction is settled outside of Mastercard and in the form of fiat currency like the U.S. dollar. 

The payments firm's chief financial officer, Sachin Mehra, discussed the expanded offerings during a virtual event hosted by Goldman Sachs on Wednesday, according to a published transcript obtained by The Block. But more broadly -- and, perhaps, more importantly -- Mehra provided a clear-cut break down of how Mastercard views what he termed "sub-categories" of digital currencies: cryptocurrencies, fiat-backed stablecoins and central bank digital currencies, or CBDCs.

Mehra called crypto "an asset class," adding: "It's not a payment vehicle as far as we're concerned." He spoke about Mastercard's crypto card program and indicated that such efforts would continue and grow over time. "We're seeing tremendous growth in that space," said Mehra, saying later:

"So that's kind of -- and we've got numerous agreements in that regard, which are already in play. And we'll continue to do more and more of those because people want to be able to use that asset class to make payments at the point of sale."

On the subject of stablecoins, Mehra noted that "we have plans to enable those, regulation pending, across our network." 

Mehra continued:

"So in other words, the delivery of those stablecoins and to allow the settlement of those stablecoins with those merchants who wish to be settling in those stablecoins on a forward-going basis. So we are enabling our network to allow for that to happen yet this year."

Lastly, Mehra discussed Mastercard's work in the area of CBDCs, which is perhaps a bit more theoretical given that such currencies remain in their nascent stage. Yet payments firms big and small appear to be positioning themselves as possible service providers should they take off -- PayPal being one of those, according to statements from the firm's leadership -- and it seems that Mastercard is no exception.

"We can bring the technology," said Mehra. "We have -- we're the leader -- one of the leaders in terms of the patents we have developed in terms of DLT. And how we can help [central banks] at the infrastructure level and/or the application and services level is something we remain engaged with on numerous [fronts] with several central banks."

Mehra concluded his remarks by calling the broader crypto sphere "a space to keep an eye on."

"I think it will ebb and flow depending on what the flavor of the day is as it relates to cryptos. We've seen run-ups in crypto prices in the past. But broadly speaking, the use of digital ledger technology is something we will remain focused on."

One potential conclusion from Mehra's comments is that whereas Mastercard is interested in capturing value around the interest in cryptocurrencies, the payments firm views stablecoins as worth the investments required to integrate them into its systems. And as for CBDCs, those remain on the horizon -- albeit one that might one day constitute an entirely new business line.

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