• Mastercard is preparing its network for CBDC transactions

  • Mastercard CEO Michael Miebach stated during the company’s third quarter earnings call on Thursday that the company is focused on facilitating crypto investments as well as preparing its network for a central bank digital currency.

    When asked about the space, Miebach said, “We couldn’t have an earnings call without talking about crypto.” “We see significant volumes in terms of people actually investing in crypto and selling crypto, so there’s a lot going on as an asset class, and I think we have a role to play in facilitating consumers who want to do that.”

    Mastercard recently announced a partnership with digital asset platform Bakkt to make it easier for merchants, banks, and fintechs in the United States to embrace and offer cryptocurrency solutions and services.

    According to Miebach, the most likely way for crypto to be used as a payment tool will be via a government-issued central bank digital currency. Mastercard will prepare its network to handle a CBDC if and when it occurs, he added.

    “How will a government put that to the test?” “How will a country figure out how to do this between private sector banks and governments?” the CEO asked. “That’s where our sandbox comes in; we can provide a safe space for governments and private-sector banks to figure out how that works.”

    “Should there be a private sector stablecoin, we might do that as well,” Miebach continued, “but we have very strict principles on when to do this and when not to do this.”

    The company’s recent acquisition will be critical to its growth in the crypto space.

    In September, Mastercard announced its intention to acquire the crypto intelligence firm CipherTrace. The company previously stated that the acquisition would improve its crypto capabilities, allowing it to gain insight into the more than 900 cryptocurrencies currently monitored by CipherTrace, which is funded by the US Department of Homeland Security.

    CipherTrace was founded in 2015 and has since provided “blockchain forensics” to over 150 of the world’s largest banks, exchanges, financial institutions, and regulators across approximately 7,000 cryptocurrency entities.

    Eric Risley, managing partner at Architect Partners, previously mentioned Mastercard’s acquisition of CipherTrace as an example of the types of deals financial services incumbents will likely make to expand their presence in crypto.

    “What exactly does CipherTrace do?” During the earnings call, Miebach stated, “They drive compliance and [anti-money laundering] checks into crypto transactions.” “We can’t move fast enough to get into this space right now because a lot of other people are deep into crypto and these questions aren’t resolved.”

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