In a complex and rigid industry like banking, even entrenched players like Mastercard find it hard to implement changes quickly. To appear as if it is keeping up with emerging technologies, the company has announced a small-scale cryptocurrency pilot program. However, its true stance is conservative: Mastercard is only willing to facilitate central bank-issued digital currencies, not actual cryptocurrencies like Bitcoin.
Mastercard’s CBDC Preference
According to a report from the Financial Times, Ari Sarker, co-president of Mastercard’s Asia-Pacific business, said the company would be “very happy” to support national digital currencies if governments create them. “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,” Sarker explained. Mastercard wants to handle only fully regulated, central bank-issued, and non-anonymous coins — instruments that are arguably not cryptocurrencies by definition and, more importantly, do not yet exist at scale.
Although some central banks have floated ideas of issuing their own digital currencies to create a “cashless society” or counter Bitcoin’s popularity among youth, those plans have rarely left the drawing board. The closest attempt is the Marshall Islands’ Sovereign govcoin promised for later this year. Meanwhile, the Russian Ministry of Finance informed President Putin that creating a centrally controlled decentralized coin might be technically impossible.
Bitcoin Pilot: Just a Toe in the Water
Sarker also revealed that Mastercard is running a cryptocurrency pilot program in Singapore and Japan, allowing some clients to cash out 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,” Sarker said. “The pilot is a toe in the water, we’re fully cognisant of the reputational risk.” He added that strict KYC/AML controls are in place.
This cautious approach reflects a broader dilemma among traditional financial institutions: they want to tap into the cryptocurrency boom but fear regulatory backlash and reputational damage. Hence, they favor central bank digital currencies because those offer control and compliance. Until such CBDCs become reality, Mastercard will continue to dip its toes cautiously.
When should we expect to see national central banks actually issuing cryptocurrencies that Mastercard can use? Share your thoughts in the comments section below!