Today Mastercard announced it would trial new solutions to expand the ability for people to spend digital assets using Mastercard cards. It has partnered with two stablecoin firms Paxos and Circle, to try out their stablecoin issuance platforms to convert cryptocurrencies into stablecoins to enable clients to spend money in dollars.
Mastercard previously outlined that it did not plan to directly support cryptocurrencies on its payment network but would enable native support of stablecoins and central bank digital currencies (CBDC). Hence card users that want to spend digital assets will have their payments converted into stablecoins transparently.
“Today not all crypto companies have the foundational infrastructure to convert cryptocurrency to traditional fiat currency, and we’re making it easier,” said Raj Dhamodharan, EVP of digital asset and blockchain products & partnerships at Mastercard.
“Through our engagement with Evolve, Paxos, Circle and the larger digital assets community, Mastercard expects to deliver on our promise of consumer choice to provide options to people around the world on how and when to pay.”
Paxos and Circle have contrasting market positions. Circle’s USDC is far more popular at the retail level (market cap $26.8 billion) and is heavily used in DeFi and centralized cryptocurrency lending to earn interest for stablecoin holders. That’s something that Circle is actively promoting via third party relationships and is an evolution from Circle’s initial focus on payments. The company raised $440 million in a May funding round and is in the process of listing via a SPAC.
In contrast, Paxos (Paxos Standard market cap $893 million) has a more institutional emphasis and provides the infrastructure for PayPal’s successful cryptocurrency offering. It also has other institutional offerings, including a blockchain-based traditional stock settlement network. Paxos raised a $300 million Series D in April.
As part of the announcement, Mastercard also outlined three sets of new relationships. It’s in discussions with Evolve Bank & Trust and Metropolitan Commercial Bank for issuing new crypto cards. Mastercard is partnering with Uphold and BitPay for real-time crypto wallet technology. And i2c Inc., Apto Payments and Galileo Financial Technologies will support processing and program management.