How Mastercard is building the Venmo of crypto

• Mastercard is building out its blockchain and crypto capabilities for consumers and finance firms.
• Recent regulatory shifts and Wall Street warming up to the space have given the industry momentum.
• Mastercard's blockchain leader walks us through his playbook for seizing the moment.

As political tailwinds lift the crypto industry, Mastercard hopes to cash in on a bet it started years ago.

The payments giant is looking to replicate its massive card network for the blockchain world to create a way for consumers, merchants, and financial institutions to transact digital assets. Doing so will require engineering leg work, regulatory support, key partnerships, and getting Wall Street buy-in. It would also insert Mastercard as a critical digital-asset infrastructure provider for the growing industry, creating a competitive moat similar to what it has built in the payments space over the past 60 years.

"We bring the scale and reach that we have to the space for the money to flow between the two worlds in a simple way," Raj Dhamodharan, Mastercard's executive vice president of blockchain and digital assets, said of traditional finance and decentralized finance.

"What is missing in this is a fully compliant framework and consumer experience offered on chain, like how you do Venmo and Zelle today in the US domestically," he added.

Bringing a Venmo-like experience to moving money and other assets via blockchain won't be easy, and financial institution adoption will be critical. As with any network, the value of the network increases as more users join. Mastercard, for its part, is targeting banks to join its crypto-focused network, the Multi-Token Network, to expand its functionality. So far, Mastercard has made in-roads with JPMorgan and Standard Chartered to develop new use cases, like cross-border payments and tokenizing deposits and carbon credits.

"Some of the players in the traditional financial world are interested in moving into this base because of the benefits the technology offers and the new business models it can create," Dhamodharan said.

A two-pronged crypto playbook

For consumers, the payments giant wants to enable its 3.5 billion cardholders worldwide to move money and transact between the fiat and crypto worlds. Mastercard has introduced more than 100 different crypto-focused card programs globally, such as credit cards, prepaid cards, and rewards cards, where users get crypto instead of cashback.

"This flow of capital and spending power from the consumer side is essential to the success of this entire sector," Dhamodharan said.

Traditional Wall Street firms represent another opportunity for Mastercard, especially as real-world assets increasingly become tokenized or represented digitally on blockchain. Dhamodharan said he wants to provide a way to process blockchain-based transactions for trade finance and cross-border payments.

Digital assets, such as cryptocurrencies, NFTs, and tokenized assets, require a different set of back-end tooling than traditional assets. Digital assets use a decentralized, public ledger that sits across a network rather than the centralized private ledger most banks use to keep track of money movement.

Historically, this infrastructure disconnect and regulatory uncertainty made it tricky for traditional financial firms to access crypto, which presented business opportunities in custody, trading, and wealth management. For banks and asset managers, crypto offered some upside in round-the-clock transaction settlements, simplifying the escrow process for home buyers and streamlining money movements between accounts.

"Mastercard has made a sizable bet on this," Dhamodharan said of Mastercard's research and development and startup-focused efforts.

Since 2015, the payments firm has filed more than 250 unique patents related to blockchain and digital-asset technology, an effort that involves filing and maintenance fees and employing specialized legal and R&D teams. It also has supported 43 blockchain startups since 2021 through its startup accelerator program. While the firm declined to share how much its digital-asset team has grown over the years, it is growing. Mastercard has eight open roles, some fetching as much as $348,000 in annual pay, geared to blockchain across software engineering, product, legal, and regulatory disciplines.

Building the next foundation

Mastercard's multi-token network, which launched in 2023 and is the foundation of its strategy, will enable financial institutions to access and build on the chain.

A November 2024 integration with JPMorgan's blockchain business unit improved the speed of settling cross-border transactions by making it available 24/7, streamlining a process that typically takes days to coordinate across time zones. Last year Mastercard also worked with Standard Chartered Bank in Hong Kong to test paying for carbon credits in a tokenized form. A February partnership with Ondo Finance, a fintech that tokenizes money market funds and treasuries on-chain, is helping Mastercard to make institutional financial assets available digitally.

It's a fast-moving and dynamic time to be in crypto, Dhamodharan said. That's a change of pace from the retreat the industry saw in 2022, when a few high-profile crypto blowups — like the stunning collapse of trading platform FTX, the wipeout of the algorithmic stablecoin TerraUSD, and the fallout of the overleveraged hedge fund Three Arrows Capital — threw cold water on the industry.

Tailwinds are coming from Washington, DC in the form of regulatory clarity, the lack of which largely held back traditional financial institutions from going all in on crypto. Regulators under the new administration are paving the way for crypto players, from the SEC to the OCC. The crypto ecosystem has been busy building more public blockchains, developing more protocols to run on those chains, and tokenizing more assets to be traded on-chain, Dhamodharan said.