As Australia works on developing its central bank digital currency (CBDC), fintechs are exploring the use cases of the digital currency. The latest to do so is Mastercard as it partners with Cuscal and Mintable, the Australian paytech provider and NFT-as-a-Service provider, to tokenise CBDCs on different blockchains.
The Mastercard solution includes controls that ensure the pilot CBDC can be held, used, and redeemed only by authorised parties. Ones that have been know your customer (KYC) verified and risk assessed by licensed service providers.
Mastercard demonstrated in a live environment how the solution could enable the holder of a pilot CBDC to purchase a NFT listed on the Ethereum public blockchain. The process “locked” the required amount of a pilot CBDC on the RBA’s pilot CBDC platform and minted an equivalent amount of wrapped pilot CBDC tokens on Ethereum.
A pre-requisite of the test transaction was that the Ethereum wallets of both the buyer and seller, as well as the NFT marketplace smart contract, were ‘allow-listed’ within the platform. With all other transfers of the wrapped pilot CBDC blocked, it successfully demonstrated the platform’s ability to implement controls – even on public blockchains.
“As the digital economy continues to mature, Mastercard has seen demand from consumers to participate in commerce across multiple blockchains, including public blockchains. This technology not only has the potential to drive more consumer choice, but it also unlocks new opportunities for collaboration between the public and private networks to drive genuine impact in the digital currency space,” said Richard Wormald, division president, Australasia at Mastercard.
Assistance from the Multi Token Network
The pilot leveraged two pillars of Multi Token Network, which Mastercard introduced in June 2023 as a set of foundational capabilities designed to enable more efficient payment and commerce applications using blockchain technology.
This includes Mastercard Crypto Credential which offers a set of common verification standards and infrastructure to enable trusted interactions using blockchain networks. Additionally, it enables interoperability which in turn offers capabilities across all supported payment tokens and networks in a scalable manner.
Mastercard Multi-Token Network, which is currently in beta, plays a key role in Mastercard’s wider strategy to expand the use of blockchain technology across several payments use cases. It will allow regulated entities to take advantage of the functionality available in digital assets and is currently being piloted with select financial institutions around the world.
“As demonstrated in this project, the solutions that play a key role in Multi Token Network have the potential to enable new levels of interoperability between blockchains, in a safe and secure manner. By enabling people to easily move digital currencies on-demand, via Mastercard’s trusted network, more consumers could participate in crypto ecosystems using reputable and reliable forms of money, while enjoying the benefits that these currencies offer such as programmability, transparency, and compliance,” added Wormald.
Paving the way for the future of banking in Australia
Zach Burks, CEO and founder of Mintable, a participant in Mastercard’s Start Path development program said: “The vast potential of NFTs was obvious during this progressive CBDC pilot. Together with Mastercard, we have identified a use case whereby digital currencies and NFTs can easily be linked, potentially stamping out fraud and theft, ending the loss of documentation and records, and unleashing new possibilities for commerce.
“Mintology, Mintable’s B2B arm, is making NFTs more accessible and more valuable with innovative new uses. While digital currencies are in their infancy, NFTs are already being used for new media, gamification, digital identities, loyalty programs, ticketing, authentication, certification, and more.”
Nathan Churchward, domain lead, payments at Cuscal, added: “It’s exciting to be able to further partner with Mastercard to support the future of banking and payments in Australia.”
The Reserve Bank of Australia’s (RBA) CBDC pilot project with the Digital Finance CRC (DFCRC) explored potential use cases for a CBDC in Australia. The project involved the RBA issuing a limited-scale ‘pilot’ CBDC that was a real legal claim on the RBA. The pilot CBDC was used by selected industry participants to demonstrate how a CBDC could be used to provide innovative payment and settlement services to Australian households and businesses.