Crypto Executives Comment on Mastercard’s CBDC Testing Platform

 

Mastercard revealed this week that it has launched a central bank digital currencies (CBDCs) testing platform. The goal is to enable central banks to test national digital currencies.

Many central banks are testing or investigating CBDCs including China’s digital yuan that is currently being utilized live and in the wild.

While many questions remain regarding the policy and market implications, countries are moving forward with CBDCs.

Following Mastercard’s announcement, several comments from crypto industry executives were forwarded to Crowdfund Insider which are shared below.

Konstantin Richter, CEO of Blockdaemon, called Mastercard’s platform a significant opportunity for newcomers in the digital space:

“Projects driven by large institutions enable users to experiment, while providing a higher barometer of trust due to the institutional backing of such initiatives.This move also offers advantages for the advancement of digital currency research in a controlled environment. Overall, Mastercard’s testing platform complements private stablecoin projects, such as Libra, as it not only propels forward wider adoption, but also bridges the gap to new and better ways of doing business for the future of finance.”

Nicholas Pelecanos, Head of Trading at NEM, believes that CBDCs make a lot of sense. Pelecanos noted that  the Lithuanian Central Bank issued the first CBDC using the decentralized NEM blockchain:

“The move from Mastercard to provide a sandbox for governments to test CBDCs makes sense and is forward-thinking from the payments giant, particularly as blockchain technology is currently revolutionising the currency and payments sector, as evidenced by major strides in the DeFi space. While I predict that this move will prompt more governments to follow suit, what will be interesting is whether these currencies will be designed to respect our freedoms and rights, true to the original ethos of crypto, or whether they will be used as a means of asserting control and surveillance.”

CBDCs are being adopted by nation-states in order to assert more oversight of their money supply – in contrast to what they can do with cash, states Luciano Nonnis, CEO of DXone:

“While CBDCs might be inspired by cryptocurrency, they are not cryptocurrencies, but, rather, digital currencies which exist on essentially centralized databases distributed over multiple institutions. We see the trend of CBDCs intensified as COVID-19 has led to apparent coin shortages in multiple nations.The main economic concerns around central bank digital currencies revolve around privacy. In a CBDC system, questions of who has access to an individual’s spending habits should be publicly discussed, and to date largely has not. Geopolitically, China seemingly has the lead in CBDC development, having launched pilot projects in multiple Chinese cities and regions. Western nations should consider how democratic values might determine the design of the CBDCs issued by western democracies”

Nonnis says that looking at stablecoins as a whole there is space in the market for two iterations: decentralized and centralized:

“While a centralized stablecoin is managed by a third-party, which very much goes against crypto’s original ethos, a decentralized stablecoin incorporates sophisticated game theory in order to stabilize an asset on a decentralized network. The former is most likely to be adopted by those in traditional finance and government, while the latter by the cypherpunks who value decentralization in the tradition of Bitcoin.”

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