Unlocking the potential of digital asset innovation

Mastercard believes that to understand the potential of digital assets — and indeed any transformative technology — we need to look beyond the headlines and assess two things. First, we need to consider the consumer and business value propositions that these technologies might one day enable at scale. Second, we need to take a clear-eyed look at the serious and unresolved sources of risk that limit broader adoption. Blockchain clearly offers broad economic potential, particularly when combined with the innovation found in community driven digital asset ecosystems.

Yet these same ecosystems face serious barriers to establishing trusted payment instruments, instituting robust regulatory compliance, delivering secure interoperability and ensuring clear and reliable governance and dispute resolution systems. So, while the opportunities for digital assets are significant, these challenges weaken the potential for their adoption and narrow the set of viable use cases.

Put another way, the outsized risks faced by participants in crypto ecosystems make only those offerings with the potential to deliver outsized speculative rewards appealing. So long as this issue remains unresolved, broader commercial use cases will likely struggle to gain traction and highly regulated financial institutions, such as banks, may hesitate to fully participate. It is our view that the full potential of digital assets for payments can be unlocked only when the inherent risks are brought under control by providing a trusted environment for parties, and the promise of the technology is made accessible to traditional financial institutions and their billions of customers.

Drawing on Mastercard’s more than 50 years of experience ensuring trust, interoperability and governance across a variety of payment networks (alongside our considerable investments in blockchain technology), we propose the creation of a new network designed to unlock the expansive opportunities across public and private blockchain networks, while also mitigating their risks.

We are calling this new network the Mastercard Multi-Token Network™ (MTN), which would serve as an entirely new scheme composed of a group of validated counterparties that form a secure network overlay that sits on top of, and extends across, multiple public and private blockchains. Transactions processed within this network could continue to be settled on those underlying public or private chains.

However, transactions by participants in the MTN would differ from other transactions being settled by non-participants, in that each counterparty within the MTN could have confidence in the compliance of every transaction, and certainty that the rules governing that transaction are clear, predictable, consistent and enforceable.

By establishing a shared set of commercial terms, transaction standards, remedies and technologies for digital asset payments, the MTN would enable banks, as well as crypto-native VASPs, to offer their customers — including consumers, governments, and businesses — the ability to seamlessly transact across multiple public and private chains throughout the eco-system in a safer, more secure and fully compliant manner. Additionally, the establishment of such a network would support the development of a wide variety of rich features, with the specific goal of building consumer confidence in, and adoption of, new use cases for digital assets, such as everyday payments for goods and services.

This white paper outlines Mastercard’s vision for the Multi-Token Network and seeks to invite a wide range of stakeholders — including traditional financial institutions, crypto-native VASPs, businesses, policymakers and regulators — to collaborate on the development of this vision.