Mastercard, in collaboration with Cuscal and Mintable, has unveiled a pioneering central bank digital currency (CBDC) solution that opens the door to seamless cross-blockchain commerce with advanced security measures.
This innovative solution, developed as part of a project with the Reserve Bank of Australia (RBA) and the Digital Finance Cooperative Research Centre (DFCRC), allows CBDCs to be tokenized or “wrapped” onto various blockchains. By doing so, consumers gain access to an array of blockchain networks, each with enhanced security and ease of use.
The technology guarantees that the pilot CBDC can only be held, used, and redeemed by authorized entities that have undergone rigorous Know Your Customer (KYC) verification and risk assessment by licensed service providers.
Trading NFTs through a cross-blockchain system thanks to the Mastercard solution
The digital economy’s evolution has led to growing demand from consumers who wish to participate in commerce across multiple blockchains, including public ones. Mastercard’s cutting-edge solution not only offers more choice to consumers but also paves the way for closer collaboration between public and private networks, bringing about significant progress in the digital currency space, according to Richard Wormald, Division President, Australasia at Mastercard.
In a live demonstration, Mastercard showcased how this solution allows a pilot CBDC holder to purchase an NFT on the Ethereum public blockchain. The process effectively “locked” the required amount of a pilot CBDC on the RBA’s pilot CBDC platform, generating an equivalent amount of wrapped pilot CBDC tokens on Ethereum.
The pilot required that the Ethereum wallets of both the buyer and seller, along with the NFT marketplace smart contract, were “allow-listed” within the platform. This successful test transaction demonstrated the platform’s ability to implement controls, even on public blockchains.
Detais about the Multi Token Network
This pilot utilized two essential components of the Multi Token Network, introduced by Mastercard in June 2023. This network provides the infrastructure for trusted interactions using blockchain networks, common verification standards, and interoperability across all supported payment tokens and networks.
The Multi-Token Network, currently in beta testing, plays a pivotal role in Mastercard’s strategy to expand blockchain technology’s applications across various payment use cases. It enables regulated entities to harness the functionality of digital assets and is undergoing pilot tests with select financial institutions worldwide.
The Multi Token Network offers the potential to enhance interoperability between blockchains securely. With Mastercard’s trusted network, this technology allows more consumers to participate in crypto ecosystems using reliable forms of money, including the benefits of programmability, transparency, and compliance.
Zack Burks, CEO and Founder of Mintable, praised the potential of this CBDC pilot, particularly in the context of non-fungible tokens (NFTs). This initiative enables the seamless connection between digital currencies and NFTs, reducing the risk of fraud and theft and expanding possibilities for commerce. Mintable’s B2B arm, Mintology, is pioneering new applications for NFTs in various sectors.
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. Nathan Churchward, Domain Lead, Payments at Cuscal, sayed
The RBA’s CBDC pilot project, in partnership with DFCRC, explores potential use cases for a CBDC in Australia. This project saw the issuance of a limited-scale pilot CBDC by the RBA, which was used to demonstrate innovative payment and settlement services for Australian households and businesses. For further details, visit the DFCRC website.
Mastercard’s commitment to advancing CBDC technology highlights its dedication to shaping the digital economy’s future and bringing secure and accessible financial solutions to consumers and businesses alike.