Stablecoins could make payments faster and more efficient, but unlocking that potential will depend on further development of the infrastructure that supports them, according to Mastercard.
Stablecoins are cryptocurrencies designed to maintain a relatively stable value by being pegged to an asset such as the U.S. dollar. They could prove particularly useful in certain remittance corridors and for currency pairs that are traded less frequently, Matthew Driver, Mastercard’s executive vice president of services for Asia Pacific, told CNBC.
However, stablecoins alone will not guarantee faster transactions. “You don’t want to have a ‘stablecoin sandwich,’” Driver said, describing a slow conversion from fiat currency into stablecoins, followed by a rapid blockchain transaction and then another slow conversion back into fiat.
Linking real-time payment networks with stablecoin exchanges at both ends of a transaction could accelerate the movement of funds. But the necessary infrastructure must first be in place, Driver said, adding that banks, businesses and other market participants also need practical ways to use the technology.
The potential for stablecoin adoption is likely to differ from one market to another. In Singapore, where retail payments are already highly efficient, stablecoins may have limited value for consumer transactions. Corporate payments, however, could present more significant opportunities, Driver said.
Driver also identified smart contracts as a possible application for business payments. The technology can automatically execute a transaction once predetermined conditions have been satisfied.
Interest in stablecoins has grown since the establishment of the U.S. GENIUS Act, Driver said.
The comments come as Mastercard deepens its focus on digital assets. The company completed its acquisition of stablecoin infrastructure provider BVNK in August. Earlier this month, Mastercard and BVNK introduced the Global Money Platform, which is intended to help banks, fintech companies and businesses handle payments involving both traditional currencies and stablecoins through a single application programming interface.
Mastercard is also exploring how blockchain technology and identity data can be used to deliver the same level of trust that users expect from established payment systems, Driver said.
