When you are an entrenched player deep within a certain system, especially one as complex and inflexible as the banking industry, it can be hard to implement changes, even when there is a critical need to adapt to emerging technologies. If a company wants to appear as if it is keeping up with the times, it can simply announce that it is piloting the new technology. Such appears to be the case with Mastercard and cryptocurrency transactions right now.
Master Govcoin Card
Credit cards giant Mastercard (NYSE: MA) is said to be keeping its options open on adopting the use of cryptocurrencies, under a just few caveats. The company reportedly wants to facilitate only fully-regulated, central bank-issued, non-anonymous coins. While such instruments are arguably not cryptocurrencies at all by definition, they also do not exist yet.
Although some central bankers have floated the idea of issuing their own digital currencies, either to help create a “cashless society” or to try and combat the popularity of bitcoin among young people, the plans have never gotten off the drawing board, assuming they weren’t just all talk to begin with. The closest attempt at implementation right now is the Marshall Islands’ Sovereign govcoin which is promised to come out later this year. And as the Russian Ministry of Finance recently informed President Vladimir Putin, the creation of a centrally-controlled decentralized coin is probably technically impossible.
“If governments look to create national digital currency we’d be very happy to look at those in a more favourable way,” Ari Sarker, co-president of Mastercard’s Asia-Pacific business, told the Financial Times. “So long as it’s backed by a regulator and the value . . . it is not anonymous, it is meeting all the regulatory requirements, I think that would be of greater interest for us to explore.”
Just a Toe in the Bitcoin Ocean
The company’s senior executive also said that Mastercard is running a cryptocurrency pilot program in Singapore and Japan, allowing some clients to “cash out” of bitcoin onto a card. However, this test is not “of scale” yet and the company has no exposure to bitcoin’s price.
“We are not operating trading of bitcoin through the MasterCard network,” Mr Sarker said. “The pilot is a toe in the water, we’re fully cognisant of the reputational risk.” There were strict KYC/AML (know your customer and anti-money laundering) controls, he added.
When should we expect to see national central banks actually issuing cryptocurrencies that Mastercard can use? Share your thoughts in the comments section below!
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Author: Avi Mizrahi