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Mastercard demonstrates interoperable CBDC for trusted Web3 commerce

The Edge Singapore
The Edge Singapore • 4 min read
Mastercard demonstrates interoperable CBDC for trusted Web3 commerce
This provides consumers with a new option to participate in commerce across multiple blockchains with increased security and ease. Photo: Unsplash
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Mastercard has successfully demonstrated that central bank digital currency (CBDCs) can be tokenised (or “wrapped”) onto different blockchains through a new solution jointly developed by Cuscal and Mintable. This provides consumers with a new option to participate in commerce across multiple blockchains with increased security and ease.

The solution was developed as part of a research project by the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC) to explore potential use cases for CBDCs in Australia.

The project involved the RBA issuing a limited-scale ‘pilot’ CBDC that was a real legal claim on the RBA. The pilot CBDC was used by selected industry participants to demonstrate how a CBDC could be used to provide innovative payment and settlement services to Australian households and businesses.

How it works

Mastercard demonstrated in a live environment how the solution by Cuscal and Mintable could enable the holder of a pilot CBDC to purchase an NFT listed on the Ethereum public blockchain. The process “locked” the required amount of a pilot CBDC on the RBA’s pilot CBDC platform and minted an equivalent amount of wrapped pilot CBDC tokens on Ethereum.

A pre-requisite of the test transaction was that the Ethereum wallets of both the buyer and seller, as well as the NFT marketplace smart contract, were ‘allow-listed’ within the platform. With all other transfers of the wrapped pilot CBDC blocked, it successfully demonstrated the platform’s ability to implement controls – even on public blockchains. 

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The pilot leveraged two pillars of the Multi Token Network, which Mastercard introduced in June 2023 as a set of foundational capabilities designed to enable more efficient payment and commerce applications using blockchain technology. This includes Mastercard Crypto Credential which offers a set of common verification standards and infrastructure to enable trusted interactions using blockchain networks, in addition to interoperability to offer capabilities across all supported payment tokens and networks in a scalable manner.

Currently in the beta phase, Mastercard Multi-Token Network plays a key role in Mastercard’s wider strategy to expand the use of blockchain technology across several payment use cases. It will allow regulated entities to take advantage of the functionality available in digital assets and is currently being piloted with select financial institutions around the world.

“As demonstrated in this project, the solutions that play a key role in Multi Token Network have the potential to enable new levels of interoperability between blockchains, in a safe and secure manner. By enabling people to easily move digital currencies on-demand, via Mastercard’s trusted network, more consumers could participate in crypto ecosystems using reputable and reliable forms of money, while enjoying the benefits that these currencies offer such as programmability, transparency, and compliance,” says Richard Wormald, division president for Australasia at Mastercard.

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“The vast potential of NFTs was obvious during this progressive CBDC pilot. Together with Mastercard, we have identified a use case whereby digital currencies and NFTs can easily be linked, potentially stamping out fraud and theft, ending the loss of documentation and records, and unleashing new possibilities for commerce,” says Zack Burks, CEO and founder of Mintable.

He continues: “Mintology, Mintable's B2B arm, is making NFTs more accessible and more valuable with innovative new uses. While digital currencies are in their infancy, NFTs are already being used for new media, gamification, digital identities, loyalty programs, ticketing, authentication, certification, and more.”

Nathan Churchward, domain lead for Payments at Cuscal, adds: “We were pleased to collaborate with Mastercard to test new approaches to managing settlement and liquidity risk through the CBDC pilot. It's exciting to be able to further partner with Mastercard to support the future of banking and payments in Australia.”

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