Mastercard
Solutions Providers
There are a few reasons why Mastercard is investing resources in exploring crosschain interoperability:
Staying competitive - Mastercard has to keep innovating in the payments space as new technologies emerge fast. Developing solutions like MTN could help retain its competitive edge.
New revenue opportunities - Offering infrastructure and services related to regulated cross-chain transactions and assets creates new revenue streams for Mastercard.
Engaging crypto ecosystem - Initiatives like MTN allow Mastercard to engage with and expand into the emerging crypto/blockchain ecosystem in a compliant manner.
Customer expectations - Like banks and merchants, Mastercard's customers are exploring blockchain use cases. MTN could help meet their evolving needs.
Technology leadership - Pioneering compliant blockchain infrastructure could help reinforce Mastercard's image as a technology leader in payments.
Preparing for CBDCs - As central banks pilot CBDCs, Mastercard needs to enable CBDCs to work within its existing network and solutions.
Interoperability imperative - Enabling interoperability between traditional and blockchain-based financial systems is key to provides a seamless experience and leverage network effect.
Responsible innovation - Mastercard can innovate in digital assets in a regulated way, balancing innovation with compliance.
1. Problems/Challenges it aims to solve
Addresses four key issues in the digital asset landscape including:
Lack of confidence in counterparty compliance
Lack of trust in the underlying store of value
Lack of interoperability between networks
Lack of clear governance procedures to set the rules of the road for participants.
2. Solutions
Mastercard Multi-Token Network (MTN): MTN is a network overlay across multiple blockchains to enable compliant transaction with validated counterparties. It provides a set of foundational capabilities designed to make transactions within digital asset and blockchain ecosystems more secure, scalable and interoperable — ultimately enabling more efficient payment and commerce applications. MTN will leverage Mastercard Crypto Credential, a solution announced in April, to establish common verification standards and infrastructure.
Services provided:
MTN Governance Framework
Compliance monitoring
Network governance
Access to Stable and Regulated Money-like Assets
Collateralized stablecoins
CBDCs
Tokenized deposits
MTN Wrapping Service
Secure cross-chain transactions: Facilitates secure transactions across different blockchain ecosystems
No need to share bank or VASP: Allows for seamless transactions even if users do not share the same VASP or bank
Seamless transactions between providers: Enhances interoperability between various financial service providers to streamline transactions.
3. Target Customers
Banks: Offered a trusted compliance framework, tokenization of bank deposits, and the opportunity to continue core business operations
Consumers: Provided with a simpler and safer way to access digital assets, using the same accounts for both traditional and digital transactions, and ensuring robust data privacy and consumer protections
Businesses: Offered turnkey standards for secure and compliant blockchain-based applications, with ensured interoperability and strong data privacy and consumer protections
4. Key Points
MTN Foundation and Structure
Forms a secure network overlay using a group of validated counterparties
Operates across multiple public and private blockchains
Ensures all transactions comply with regulations and adhere to specific governance rules
Onboarding Process for Banks and VASPs
Must meet stringent, case-based onboarding standards
Implementation of robust KYC, KYB processes
Continuous screening and monitoring to prevent illicit activities including money laundering and terrorist financing
Stable and Regulated Payment Tokens
Money-like assets to be used as trusted store of value and medium of exchange in the network
Includes fully collateralized stablecoins, CBDCs, and tokenized retail bank deposits
Facilitating Secure Cross-chain Interoperability
Addresses issues of fragmented networks and security vulnerabilities
Enables secure cross-chain interoperability across blockchains and traditional networks
Comprehensive Governance Framework
Establishing rules to govern interactions between network participants
Ensures protection for consumers and businesses, and outlines liability among participants
Leverages Mastercard's experience in developing rules for payment networks
Confidence in Transaction Compliance within MTN
Transactions settled on public or private chains can be conducted with confidence in their compliance
Transactions settled on underlying chains but all MTN transactions are compliant
Provides clarity and predictability in the rules governing transactions
Shared Set of Commercial Terms and Standards
Establishes uniform transaction standards, remedies, and technologies for digital asset payments
Allows seamless transactions across various chains in a secure and compliant manner
Potential Features of the MTN
Offers consumer protections including zero-liability guarantees and potential reversals
Standardizes terms and conditions for certain programmable smart contracts
Clearly delineates the tokens permitted for use as payment on the network
Users can utilize digital representations of a portion of their bank deposits in transactions on the MTN
These "tokenized deposits" can interact natively with other tokens and be used in programmable smart contracts
MTN Compatible Wallet
Facilitates customer interactions through a wallet compatible with MTN
Provided by a bank, VASP, or other licensed entity allowing interaction with crypto assets from various blockchains
Allocation of Liability and Smart Contracts
Rules allocating liability among participants, with some being executed through smart contracts
Enables efficient and automated execution of pre-programmed governance mechanisms
5. People
Raj Dhamodharan - Executive Vice President, Blockchain and Digital Assets.
6. Industry Initiatives Participation
7. Resource
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