In a recent trial in Australia, Mastercard teamed up with the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) to demonstrate that central bank digital currencies (CBDCs) can function on various blockchain networks.
Together with Cuscal and Mintable, Mastercard took on a crucial challenge: enabling consumers to make transactions across different blockchains, including public ones. Currently, people mainly use private cryptocurrencies for such cross-chain transactions, but these come with varying levels of risk compared to bank-backed money.
The solution they developed during this experiment involves turning CBDCs into tokens on different blockchains, effectively connecting digital currencies with non-fungible tokens (NFTs). The system comes with strict controls to ensure that only authorized individuals who have undergone thorough Know Your Customer (KYC) checks and risk assessments conducted by licensed CBDC service providers can hold, use, and redeem these tokens.
One specific use case explored in this pilot project addresses the challenges faced by NFT artists and publishers. They often struggle to get fair prices for their digital assets due to the volatility and fluctuations of cryptocurrency values. This solution allows them to list their artwork in their local currency.
At the heart of this new approach is the Mastercard Multi-token Network, a set of foundational tools designed to make payments and commerce more efficient using blockchain technology. Launched by Mastercard in June, this network empowers creators to securely receive payments via tokens linked to CBDCs on public blockchains.
On the flip side, NFT buyers can smoothly transfer the value of their CBDCs from their regular bank accounts to public blockchain wallets facilitated by the Mastercard Multi-token Network. This enables them to use their CBDCs much like traditional fiat currency.
This successful trial highlights the potential for CBDCs to break traditional financial barriers and integrate seamlessly with the blockchain world. It’s a significant step forward, but it’s not Mastercard’s first venture into Web3.
In October 2022, Mastercard launched Crypto Source, a program that allows financial institutions to offer secure crypto trading services to their customers.
In January, Mastercard introduced the Web3-based “Mastercard Artist Accelerator” program, aimed at supporting digital artists in the music industry.