Payment card issuer Mastercard has announced an experimental project for a conversion system between crypto and fiat currencies in collaboration with USDC issuer Circle
The American payment giant will thus offer the USDC stablecoin as a relay asset to allow its clients to carry out daily financial transactions using cryptocurrencies.
USDC on the Mastercard network
Mastercard has just made another giant leap in its adoption of cryptocurrencies a few weeks after announcing that it wants to add this new asset class to its network.
In a statement published this Tuesday, July 20, on its website, the company Circle, the originator of the USDC stablecoin, announced a partnership with Mastercard to offer a service for converting cryptocurrencies into fiat currencies.
As part of this experiment, the two companies will conduct a pilot project where USDC will act as a gateway between cryptocurrencies held in consumers’ digital wallets and fiat currency paid to merchants.
“The engagement between Circle and Mastercard strengthens how USDC is expanding its role in Internet payments and commerce while building a vital bridge between digital currency payment systems and large, established payment networks,” said Jeremy Allaire, co-founder, and CEO of Circle.
The demand for USDC has increased dramatically over the past year. Global users, businesses, fintech, and payments companies turn to Circle’s stablecoin more and more.
As of this writing, the amount of USDC in circulation has reached over $25 billion, with more than $785 billion in blockchain facilitated transaction volume.
A mutually beneficial collaboration
Although this news comes a few months after Visa’s announcement to integrate USDC into its network, it remains a major development for the payment giant Mastercard.
This experimentation project between Circle and Mastercard aims to reduce the steps required for card issuers who wish to enable payments using digital assets. Indeed today, they must first convert digital assets into fiat before settling a transaction.
This additional step is expensive and complex, especially because many cryptocurrencies are not redeemable for dollars while they are against USDC. Additionally, using a stablecoin is faster than many other traditional settlement options.
“Today, not all cryptocurrency companies have the basic infrastructure to convert them into traditional fiat currency, and we want to make it easier for them,” said Raj Dhamodharan, executive vice president of digital assets at MasterCard.
Experimentation with this conversion system between cryptocurrencies and fiat currencies will allow many cryptocurrency companies to offer a card payment option to their users, wherever the Mastercard network is accepted.
With the massive number of businesses and traders fueled by the U.S. payments giant worldwide, Circle is securing its stablecoin prosperity and could allow it to hunt down its competitor, Tether’s USDT.