Mastercard's HUGE Crypto & Stablecoin Initiatives Revealed! with Raj Dhamodharan

started this journey in twenty thirteen. Their hardware wallets are open source and they support a variety of tokens from Bitcoin to the top all coins and even new coins such as black Rocks, Biddle and I'm personally you of the Treasure Save five. It's a beautiful device and easy to use, and Treasure offers a handholding service where they can help you on board and set up your device so you can speak directly to a Treasure representative who

can hold your hand through the process. And if you use the code thinking Crypto all one word, you can get five percent off your purchase of a Treasure device. So to learn more about Treasure and all their great devices and services, visit the link in the description. Hey, folks, welcome into the Thinking Crypto podcast. I'm your host, Tony Edward, and joining me is Rog de Moojoren, who is the executive vice president of Blockchain and Digital Assets at MasterCard. Rog.

tell us a bit about yourself and your professional background.

of building people pursuing people career in different sectors. I used to be in our Asia Pacific region for a while and yeah, I'll have a lot longer payment background and also live in the Bay Area, so I have a doublegateory startup background as well prior to all this, which is also helping us navigate this sector because this is quite dynamic and you got to you got to get into it if you will.

was their first encounter with bicoin or crypto or blockchain and what was the aha moment? When did it click for you?

earliest thing was years ago. I can't even remember. This is probably back when I was in Asia Pacific just trying to connect, just set up a wallet and connect to various blockchain zen, try to swap, try to get into it. And that's probably one of the earliest times.

I think that the critical unlock is really when the transition from the bitcoin just as a as a as a currency into more of a programmable platform, when the change themselves were more gentle purpose more it becomes like an alternative compute method that can really people can build applications on top of it. That is, I think is the is an unlock where I personally saw, Wow, this

has actually a lot more to it. I know, the res his history, and I'm kind of in terms of how this has opened up beyond just the core store of value the bitcoin story. Yeah.

hundred and fifty million merchant locations. You can just simply with a tap and pay, and you don't decide what currency. You may have a currency. You know, you may use a debit card, you may use even a crypto card, and the other side the merchants decide what currency that they want to get paid, and you really don't think about it. You just go tap. It simply works. You could go to any of the countries and simply work. That complexity is all abstracted away into a simple consumer experience,

and that's what people think about. And so when new forms of store of value comes in in this case we are talking about crypto, whether that is a bitcoin or a ether or even stable coin, simply how do you access that value to be able to spend anywhere

that you want to spend. So the way that we think about it is so, yeah, as these store of value become a more legitimate it has legal standing, a regulatory standing in a given jurisdiction, we want to make sure that the power of the network is available to this new class of values as well. It is. So it's all about coming to a very simple thing, is choice, right, can you know? People want to spend the money that they have, and we want to make sure that it's

easy to do. People want to receive a specific currency they want in a given jurisdiction, we make that happen as well. So it's really about that. It's that simple. That's why we get involved in the space because we have a publication to curate and provide the best forms of currencies and optionality to all the people. Starting with you know, consumer payments, but it also kind of goes into other forms of payments like remittances and so on.

beyond just okay, I want to spend some Bitcoin or either or whichever crypto asset, that the stable coin technology will be powering majority of payments because of the instant settlement, the transparency, and the end consumer may not even know that's happening behind the scenes. They just need to know it works.

very seamless. Now, some of the people behind the scenes may say, look, I have a bank account and I have a checkingcount saving account, or some people may say, look, I have this great credit card from they have a great credit card from say American Airlines credit card. It could be that, or it could be a Gemini credit card that owns bitcoin back in towards whatever that card form that you have, you could go spend at that merchant.

Right now, what we've seen is that, look, we are enabling that optionality on the consumer side, like if you have a stable coin wallet, you can access it through this card and the merchants, most merchants in Western markets actually continue to prefer to get paid in local currencies, and in many markets you're required to get paid in the local currency. So that's what that's what the merchants need to get paid in. But in some markets people prefer, oh, no,

can you pay me in stable coins? Like I don't, and they don't say that this is very important, right Tony merchants, let's say in Argentina, in another market, okay, they say that, look, I prefer to get paid in a stable coin, right. They don't say that, if Tony comes with the stable coin wallet, please pay me in stable coin. They actually say, look, I want to get paid in stable coint because that's my preferred way to

receive no matter who shows up. So no matter which one of those cards that I talked about shows up at that merchant location, they still get to exercise their choice of getting paid in stable That's quite powerful right now, whether you know, yeah, I can stable coin move faster? We actually you know, you know, in our remitants business, we today settle even without stable coins, in real time, near real time with each ten billion plus locations around

the world. Yeah, in some cases stable coins can help accelerate. You know. We can talk a little bit about the programmable nature of the money and how it can help. But it is part of the answer, it's not the whole answer, you see, somebody need to still stand up the whole surface.

of how absurd that looks. You want to be able to send the money based on simple email or mobile number, and the other person should be able to exercise that choice. Maybe they're a bank account person, maybe they're a telco wallet person. Maybe there is a crypto wallet, there is a cryptovallet person. On the other side, you need to be able to send the money whatever format that you have,

and that's important. So again people talk about oh stable coin, Yes, it can be a critical part of that starting of the rail, the remittance flow or the end. But you need to be able to go from fiat to stable, stable to fiat if you truly want to deliver the choice thing. As you can see, this is a repeating thing between the between both use cases.

about programmable money and this technology allowing each to program these stable coins or different assets. Tell us about your view on that and how MasterCard may look to leverage that.

for the crypto world. If you want, uh, how do you do that in a in an automated way, but in also a very highly assured way, meaning that the money moves only if the asset moves and if it both happens together or or or not. That is just one program ammable primitive. I think that's quite powerful. There are other primitives like, for example, can I can I actually hold the money for a certain purpose until you meet that condition?

format that they prefer. Sometimes it's stable coins, sometimes it could be bank deposits. So we think that even if you are in the form of a bank deposit, the classic bank deposit, you need to be able to bring that programmability on those primitives of like the DVP are conditional release of payments. All of that work seamlessly, and that's part of the reason. We've been investing the tokenized deposit technology as well, and we have products and solutions

there as well, and I think that is important. The reason for that is, like you know, we stable coins are you know, have grown tremendously and they're going to continue to grow. There's no doubt, especially with the clear regulatory clarity of the Genius and MICA and so forth. But it's also true that the fundamental economy today is continue to be driven by this fractional reserve system, which enables banks to take deposits, lend and create money supply,

if you will. That drives the economy, so that format will continue to exist. I haven't checked the market cap. I think we have a few hundred billion in terms of the stable coin market cap. I think US dollar deposits of alone is fourteen fifteen trillions something like that.

In terms of posits, that's just one currency. So I think it is our obligation, you know, those of us in the crypto industry that bring the benefits to the biggest money format and regulated money format that exists, which is deposits so we've been saying this for some time as well, and because we believe in that, and so it is not like one currency versus one format versus

the other. As long as it has the right attributes, which is clear parameters around how the currency works, regulatory framework right, and we are able to offer that format in use cases in a way that's accessible to that consumer or a business base, then we are for it. And that's been driving our product strategy on this for quite some time.

pretty historic, and you know it has a lot of implications means as well as US dollar. Do you envision that innovation around stable coins? Will you know, have an explosion, We're going to see new issuers and could that market hit one trillion by next year.

is a rail to move money. You build use cases when you for that segment consumer or a business segment, go put all the protections and on the simplicity and user experience with it for you to turn into an end to end use case, whether that is consumer payments, which we think that continue to cards continue to be the best way to access them, even if the format of the currency is the tables and as I was saying in the remittance is it is it is really

about standing that end to end use case where people may have choice about where you want to send and received. Yeah, I think the future is bright on that. You've also seen other jurisdictions Tony, And you know we briefly mentioned MICA in Europe, so you can expect more stable coins that are Euro denominated to come up. Hong Kong HKMA Hong Kong Monetary Authority has a clear framework for stable coins as well. M AS in Singapore has a clear framework for stable coins as well. UAE is coming up

with a similar one. So you can see that multiple currencies, not just you as dollars will will will be there and as you can see that in itself will will start. How do you get from one to another, and all those things need to be solved. It's still not those are those are in early stages. All of this would

determine the kind of the trajectory that you're on. Right, So today it is it is actually in most markets to getting too from stable to feat Those markets are not as deep as fear to feel it, which is a critical infrastructure you need to unlock in order for that to get to the next level of the growth for it to be considerct kind of a normal other form of the currency. Right.

these different digital currencies in stable cooin format there they can be interoppable, they're on multiple blockchains, and well many of us are going to have digital wallets. We're headed to a more digital world. We're not going to use cash and going to have the optionality like you were saying before, maybe some of some quarters at a traditional rail summer powered by sable coins. You got digital assets

in crypto. You know, all that in that respective wallet, and you know, I could send international payments from my phone, I can make a payment at Starbucks and all these things are done in that wallet.

For example, card Gemini is the credit card that owns crypto rewards. We have a card with Crypto dot Com in the in the Middle East, crack in Europe for example. Even the metal mask and the self cut to the wallet have a master cut card attached to it. So you go through a KYC process, you can bring your funds, whatever the assets are, and the card starts working as

simple as any other card. The kind of power that it puts in the phone consumer is quite quite quite significant, and that's what we are excited about to bring bridge the world of the crypto to the kind of the one hundred and fifty million merchant accept on locations and growing. I should say.

table coins you're using because I noticed that master Card had joined the us d G stable Coin Consortium, a global dollar network in stortium. Excuse me, are you primarily using us d G or are you kind of agnostic? We're using us DC and other stable coins as well.

was a part of stable coin. What you saw is announcing last couple of weeks ago is that we are adding a few more coins support That includes the PayPal us D U s d G. I'll come to the USDG discussion in a bit, and five U s D as well, because Fisov announced that plans to launch one. What you're seeing there is that as long as the coin is well formed, confirmed to a certain regulatory jurisdictions where they operate in, we want to be able to make that available in our network, which is not very

different from how our traditional network works. One hundred and fifty plus currencies are supported in our network, several of them as settlement as well, So it is it's natural for us to add support to that those currencies with USDG. You asked an earlier question, look or everybody wanting to launch coin. Look, I think there is an upper limit to the number of coins that would can play a

useful role in driving some of these use cases. Because each look you made this point earlier, each of the stable coin, if you look at it, you got to issue them, manage them, make them available, multiple blockchain networks, list them in multiple exchanges, create deep liquidity between that pair and the other pairs. It is actually a hard work, and we think that the market would converge to a few stable coins in the world. We're not here to

pick winners. What we wanted to do here really is with the USDG joining with paksos to provide the option for a financial institution or a fintech want to offer this to their consumers, they should have an easy way to do. So what we're hoping is we can provide that access, and we already it in an off ramp between the FIAT and the stable coin world, and we think we can continue to play a very effective role

there in partnership with the pacsos. So we're making it easy for them to access and that's the part of it, and I think that helps people kind of uh, you know, use that coin and build scale around one or two if you will, and we'll continue to support other coins as well. As I was saying before, uh, this is this is more of an access mechanism, easy access mechanism for financial institutions.

that one really fascinates me. Where building the technology where I can just give you, uh a let's say, like an email address sort of story to speak, or a user name, and then you can send me any form of payments.

a little bit. You know, what does it take you've got? If I need to send you ten dollars? I had to ask you kind of you know, Tony, can you text me or blockchain address? And you may text me. And let's say, even I know how to use it in this case, I may know, but a common consumer they have to go cut and paste to wear. Okay, I go to a wallet and I send it. Okay, I have soul, can you receive soul? I have US d C and you prefer usd G H are you

on is your wallet provider connected to the right chains? Uh, there is so much complexity, right, just scratching the surface. And how do I my let's say I'm with with with a crypto wallet, and how do they know that you your wallet provider is a compliant one? Uh? Is what jurisdiction you are in? Are you a ky seed person? How do I prove that I'm actually facilitating a travel

rule compliant transaction? So so much of this we said, look, it's very simple if you if you look at how the experience is in this case, let's replay the experience and I would say, you know, Tony, I would like to send ten dollars and you would basically, you know, we already know each other's mobile number or email, and I'll go plug that in my and immediately my wallet provider will have information about who's your wallet provider, what kind of assets that you can receive safely, what kind

of assets, what level of ky C that you've passed, and all of that information is available behind the scenes. And so that it's a simple. The experience is so simple that you just entered the email, it immediately kind of verifies you've done right. So that is that I think is quite resonating quite well. What we've also announced the last couple of couple of weeks ago is that that kind of a simple ALIAS based experience, which is

pure crypto to crypto, is already live. And then the marketplace for us with the crypto credential that you refer to. But we also have a classic remittance business that was originally fear to fear it, where now we can enable stable card wallets to send money to each other as well. So that functionality and this alias is coming together. So the beauty of that is that, look, you could start with uh. You could in this case you could have a bank account and the experience would still be the same.

I will send money to this mobile number, so to speak, Tony's mobile number, and you could have made the choice to say, look, I would actually receive the money in the bank account, and you may be in let's say Philippines and I'm an US or vice versa. That kind of simple user experience is all possible now. And because we are able to move the money behind the scenes, even one leg is krypto on the other leg is fie it right uh and UH. And that comes together

with the with the simple consumer experience. We're quite excited about the combining our money movement thing with this, and because that's what I think consumers wanted, that's what the businesses were actually operating opening up this remedtancy case want. Look, everyone wants to be compliant to do the right thing, but it's it's got to be easy to do so.

It got to be easy to do so for the with the right tools and services, which which which is which is why we are quite excited about this combination.

don't know if you already touched on that earlier with some of the details we were discussing.

the programmability to it. So so that is that's what we we've done there. We've started working with some of the largest banks, including JPM and this topic. They've they've been a tremendous innovators in the marketplace as well. They've led pretty much the whole industry from a financial institution perspective in taking steps and we're very glad to partner

with them. And end of the day, what that means is that a business or a consumer with a bank account able to participate in some of the tokenized real world assets, which is a growing space. This is the next cycle of growth for for the crypto industry. I feel that's coming up in terms of the new assets coming onto the chain. So if new assets come out to the chain, the commerce will follow. And how does you need a money format that is that has that

addresses everybody's needs? Uh, And that's been our our bet and and market is clearly you may have seen Bank of England recently made pretty public remarks about how they are very pro togonized deposits are You've seen some of the largest financial institutions and come out and say, there's the same thing. We think that uh oh, this this kind of format is here to stay. But the key is a buyer may want to start with the bank account, Tony.

You may start to see the theme repeating itself. The seller of something may want to receive in stable coins. All that need to work. This is we that's for the industry like us to figure out how to make that simple to work. And the solution is just that if you look at a consumer or the business experience of how multi tooken network, its simply you connect to your bank account to it, and you can go to any of the tokenized asset marketplaces and you buy it

just like anything else that you buy. But in this case, behind the scenes, you know, programmable money is created, a settlement is happening. This is all bit of inside the system and in terms of how it works. But the idea is to make it very very simple from end user perspective, no matter the kind of format of the money you have.

this technology allow these different institutions MasterCard and banks and much more to have a more trusted partnership. Obviously, there's been partnerships set up. Historically, you look at the Swift system and the movement of money and the messaging system. But with blockchain, I can trust these different intermediaries and different folks much better. It's all real time, it's all transparent.

this possible more easily? Absolutely yes, but it reminds what is also true is that you got to have a common interoperable standards in terms of how these things are set up, and you really need to know that, Okay, the other person, the person with the other side of the wallet, or the buyer or the seller in this case, who's the person, what KYC levels have gone through, how do you send money to them, and how does it get settled. All of that interoperability need to be set

up by some third party. Having provided interoperable solutions between financial institutions for consumers and merchants for decades, and we think we have a role to play. So if there's, for example, in the case the JPM example that you gave the other bank, if you send a tokenized deposit from one bank to another bank, somebody need to make

sure that that can be settled. Somebody need to make sure that it is going to the right person, and it is the standards of how one token interprets with other. We think we have a role to play as well. So it's really, yes, it's decentralized blockchain technology, but at the same time it requires people, people kind of setting the standards. It's not very different from how Internet has evolved, Tony. If you think about it right, Internet is a decentralized network.

Almost all the companies that are built businesses on top of them is using that as an infrastructure to build solutions on top that kind of that they couldn't do before. But they're all centralized companies. I think what you're seeing here is the same thing play out right. You know, some of the largest exchanges are our corporations, right, so providing solutions and there is and they've been able to build scale examples like coin based in crypto, dot common Song.

So they're able to build scale because they are able to organize around use the technology, but simplify it to make it accessible for everyone.

for interoperability, these the banks, some of the other trade FI institutions and some of the native crypto companies need to form some sort of association developer standard. The government also has a buy in because payments will probably have to go in and out the government in these formats, and that's kind of how it gets going.

that case compared to a classic or remittance transaction. The rules may be different, the participation requirements may be different, the regulations may be different, but that framework applies, and we think that's a scalable approach to opening up other use cases on chain as well. In fact, our multi Tooken network we use a motion of that technology for enabling buyers and sellers. Right. Yeah, standardization is is uh is.

I think interoperability is quite important for this to scale. Look, you're going to see multiple coins come up, right, You're going to see multiple form of currencies come up, and yeah, it need to. You can't expect this to kind of self regulate, if you will, in terms of how this interoperability works. You need somebody to kind of stand up a service that make sure that it indeed happens under a common approach and if it, if it touches consumers

user experience, how do you standardize that? That's quite important too.

on that gives compatibility. We are, again here very agnostic where we we will go wherever the commerce activity happens, right, and in some ways this multiple chains are are, makes makes transactions a bit more harder to make it work because if you could have money in one chain the asset and another chain, and again you know, somebody need to provide the assurance that the transaction will go through. That's part of what we do. Uh. And yeah, we

are again chain agnostic. Will go where the assets and assets are. And the reason we go where the assets are is because that's where the commerce happens and that's where the need for a payment experience need to be there. Uh. And be it open to supporting all chains in the fact that we work with the number of them at the moment, some of them, I should say, it's there

are some, especially in the institutional US cases. You will also find some chains that are private and are semi public or permissioned, whatever the grade of openness that you want to you want to put a term to.

think we're going to see a mix of that. Let's say, like you and the folks in Massacard may have certain transactions, certain things you want on a permission blockchain, but some on the public. Same thing for JP Morgan, these banks, right because there or you use the public and you have ZK or is your knowledge proofs as part of a way to hide the information.

is great. But I think there would be a class of transactions that would maybe look end of the day. Why this public private chain debate comes in is very simple, right. It's all about do you have all the people who need it in their ecosystem participating in that chain. If not, there is an efficiency created. So there are certain ecosystems where institutions can come together and say, for this class

of transactions, we would rather keep it. We'd still want it programmable, we still want it interoperable, we still want it kind of sufficiently decentralized so that we can all use it as a common infrastructure. But I don't necessarily feel that unless you have a b to b agreement between two institutions. There is no reason to put this in the public chain. That would be a certain class. But I I think I'm a big believer, uh in in the public chains. The reason for this is that

that's where the open innovation happens. Anybody could go build an app and any any currency provider in a e r C twenty using the e v M example, the standard or the derivatives that are quite a few derivatives on the on, the on the on that as well, UH provide the programability. What is programmability is being able to deal with this multiple currencies in a simple way. And an application or a smart contract in that case is what I call us. An app can take advantage

of this currency formats. And I think that that kind of lego block like building is essential to essential to building scale and so therefore public change are here to stay and I think I think that would continue to be the primary hotbit for innovation and the space, and we're coming to do providing solutions there.

better payments and different options. But also with this technology of blockchain, I feel like eventually our data, like my information can be on the blockchain, encrypted and I can feel free to release it to different brands and companies like MasterCard, right, and maybe this will help prevent data breaches and you know things we've experienced over the past

few decades. Do you think it makes sense eventually that our information will be on the blockchain and tight in with our payments and digital identity.

to be tied to that government. ID what we preferred, at least the way that we've approached in crypto credential is that I would rather focus on use cases that this identity or this wallet is enabled for and if you've gone through the sufficient checks or the KOYC process by somebody who has the obligation to do the KOYC for you can complete that's quite important, and they have an economic reason to do so, because the issue with the kind of the notions of self sovereign identity and

so on is that it lacks kind of the overall commercial incentive and tie back to that government ID, which is essential for corporations who regulated in the jurisdiction to provide services to you. So we rather kind of take the approach. It's a bit nuanceers, but what I'm trying to say is that we'd rather take the approach of saying, look, in order for you to send a remittance transaction in this jurisdiction, here are the KYC requirements. Here are the

travel rule requirements. And by the way, this company could be an exchange, could be a bank has taken on the obligation to KYCU to meet that obligation, and we will Crypto Credential will provide a proof of that on chain that Tony has gone through this in US according to these requirements. By this vallet provider and they stand behind Tony. Now Tony can go send money and this person, this banker who did the KYC, stands behind that transaction.

So this is a more a use case focused view of the identity, which is a very practical way that we're moving forward. Not opposed to this evolving to some UH an identity kind of a pure form of an identity, but that that remains to be seen. We've taken the practical approach of, you know, what activity you want to enable with that identity, who stands behind that that that that that that identity for that use case in order

to enable. So I think that's that's the practical approach that we've taken, and it seemed to resonate in the market because people are trying to do the same.

crypto assets? Because that bill, will you give some clarity on security? Not security kind of the swim lanes essentially.

like currencies, but assets. People can buy their bitcoin if you will today and we hope that that will continue. But the rest of the nuances of the various things, we have to see what the implications are, and we are focused on making sure that the simple payment experience is enabled for all those conscers, rumors and continue to be. There is our primary focus there.

up questions here for you. Uh, First, if you could create your own metaverse, what would the theme be?

the real world experience. So we have some lessons learned from that and we look to re engage the market as as this thing evolves, but it needs to end of the day, I think it needs to provide something really.