Mastercard’s Interoperable CBDC for Web3 Commerce
Mastercard has introduced a revolutionary solution in collaboration with Cuscal and Mintable to facilitate the seamless integration of Central Bank Digital Currencies (CBDCs) into blockchain platforms. This development is crucial to a study by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) that looks at CBDCs’ potential applications in Australia. The framework ensures that pilot CBDCs can only be viewed and tokenized by parties that have undergone KYC confirmation and risk assessment by certified service providers.
Mastercard’s Division President for Australasia, Richard Wormald, said that the business made the move because of rising consumer demand for the ability to conduct transactions on many blockchain networks, including public ones. This action increases consumer options and promotes collaboration between private and public networks, which significantly affects the world of digital currency.
Using a pilot Central Bank Digital Currency (CBDC), Mastercard showed how their solution enables users to purchase NFTs on the ETH public blockchain in a real-world scenario. The process included securing the required amount of CBDC on the RBA’s network and producing Ethereum tokens with the same value as CBDC. To ensure controls even on public blockchains, the platform required authentication of the buyer’s and seller’s wallets as well as the NFT marketplace’s smart contract before the test transaction could be processed.
This demonstration uses key features of Mastercard’s June 2023 Multi Token Network. The Mastercard Crypto Credential standardizes verification criteria and infrastructure for secure blockchain interactions, promoting interoperability between payment tokens and networks.
A key part of Mastercard’s plan to increase the prevalence of blockchain technology across a variety of payment contexts is the Multi-Token Network, which is now in beta. Allowing regulated entities to make effective use of digital assets, it is currently undergoing global testing with a select group of financial institutions.
Wormald further emphasizes the potential of tools that facilitate secure connectivity between blockchains. This technology simplifies the transmission of digital currencies over the Mastercard network, enabling more people to participate in crypto ecosystems with secure payment methods that provide transparency, compliance, and programmability.
Zack Burks, Mintable’s CEO and founder, explains why it makes sense to use NFTs alongside digital currencies. This link can help stop fraud, reduce data loss, and open up new possibilities for use in fields as diverse as media, loyalty programs, gaming, authentication, digital identities, tickets, certification, and more.
The CBDC pilot is an exciting opportunity for Nathan Churchward, Domain Lead at Cuscal, to collaborate with Mastercard in researching innovative settlement and risk management for liquidity solutions with the potential to revolutionize Australia’s banking and payments system.
In a preliminary study, the DFCRC and the RBA looked at CBDC. The Reserve Bank of Australia (RBA) issued a token CBDC as a “pilot” to demonstrate how it can offer novel payment and settlement services to individuals and businesses in Australia.
Mastercard’s tokenization of CBDCs shows how traditional finance may connect with blockchain and digital assets. This program expands customer alternatives and creates intriguing new financial prospects.
