Mainstream brands and financial services firms are testing the waters of crypto, but many are hesitant to fully dive into the blockchain realm due to uncertainty and a general lack of trust.
Every industry has its hiccups and bumps, but crypto has been especially hit hard recently, facing a lot of headwinds from regulators and its own internal pitfalls as it tries to scale.
“The crypto industry has gone through a lot in the last few quarters,” said Raj Dhamodharan, Mastercard’s EVP and head of crypto and blockchain, during a blockchain-focused panel at the company’s North America Innovation Day event.
While the web3 world has seen a significant influx of capital, innovation and talent, more work is needed to ensure traditional players — as well as new ones — can enter the ecosystem confidently.
“People look at crypto and think of it as an investment, but there’s a whole sector that’s a lot more useful for financial industries as a whole,” Dhamodharan said. “The technology itself holds a lot of promise.”
Crypto technology has a handful of use cases and utilities today, like the ability to store and move capital and value, but those use cases are limited when safety and simplicity aren’t prioritized, Dhamodharan said.
“What you need for this tech to scale globally is interoperability and underlying security of trust,” said Johan Gerber, EVP, security and cyber innovation. Mastercard aims to provide a technological foundation that allows everyone from small startups to massive financial institutions to innovate and build upon.
“We don’t really care if you want to [invest] or not,” Gerber said. But the company will enable and provide crypto offerings and products to its consumers so they have the option. “It’s not our place to choose a winner or loser,” Gerber added but said that it is Mastercard’s job to facilitate the proper rails for customers.
The payments company will also try to identify gaps in the crypto ecosystem and bring solutions to market to encourage more people to participate in the ecosystem, Dhamodharan said. “That’s what this is about.”
Last month, Mastercard launched its “Crypto Credential” initiative, which is a set of standards and infrastructure that aims to help certify interactions between consumers and businesses using blockchain technology.
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The company is working with crypto wallet providers Bit2Me, Lirium, Mercado Bitcoin and Uphold to process transfers between the U.S., Latin America and the Caribbean. It’s also teaming up with blockchain-based groups like Aptos Labs, Ava Labs (creator of Avalanche), Polygon and The Solana Foundation to bring the set of standards to developers in each ecosystem.
On the opportunity side, crypto has been part of a “decentralized, creative currency, somehow alternative to traditional finance,” Dhamodharan noted. “We don’t think that’s the [only] future; that’s one sector of it.”
There are other opportunities for the government to bring regulated currencies to this technology and for financial institutions to integrate it and change the way the current financial service stack operates, Dhamodharan said. “We can look at it and say crypto has a lot of compliance issues, fraud issues, and you can say I don’t want to touch it,” he said. “But how can we make it safer?”
That’s an ongoing question that many, Mastercard included, are trying to answer. Crypto companies are creating bigger bug bounty programs, for example, in an effort to keep security high. There have also been initiatives from many others to advocate and push for clearer regulatory guidelines in the industry.
“This is an evolving space, and in some cases, regulation is advanced, like in Europe with MiCA,” Dhamodharan said. “It’s great to see that clarity, [but] in other markets, it’s still a work in progress.” The differences, he said, are “important to tap into … because that’s where the next innovation comes from.”
Even with all the downfalls and hurdles, “it’s impossible to envision a future without [crypto] being a part of it,” Gerber said.
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