TradFi giants accelerate their layout in the encryption track, Mastercard launches on-chain coin purchase service

In recent years, traditional financial institutions have been accelerating their entry into the cryptocurrency space. On June 24, payment giant Mastercard announced that it would provide on-chain encryption cryptocurrency purchase services, further promoting the mainstreaming of crypto payments.

In fact, Mastercard has been deepening its encryption strategy in recent years and has moved from the initial exploratory phase to the actual implementation phase, becoming an important part of its global financial landscape.

Mastercard Opens On-Chain Deposit Channel

Recently, a blockchain service provider has officially reached a strategic partnership with Mastercard, allowing over 3 billion cardholders worldwide to purchase cryptocurrency directly on-chain using credit cards. This is not only another significant move by Mastercard in the encryption field but also achieves a deep integration of the TradFi network with the core components of decentralized finance in the fiat currency deposit pathway, potentially opening a new channel for the large-scale popularization of on-chain finance.

According to the introduction, in this service system, users do not need to register an account with a centralized exchange or perform complex on-chain bridging processes. They can simply initiate a transaction request through a decentralized trading platform that has integrated this functionality to purchase encryption assets using a Mastercard.

The entire process involves multiple parties: decentralized trading platforms serve as the user front-end entry point, enabling the initiation of credit card payment instructions; traditional payment gateway service providers offer seamless card payment processing, verifying and handling users' fiat currency payments; encryption currency and stablecoin infrastructure providers are responsible for converting users' fiat currency into encryption currency, while ensuring compliance, providing liquidity, and on-chain services; decentralized oracle networks and interoperability standards ensure the security of on-chain transactions and the reliability of data, while their ecosystem decentralized exchanges utilize liquidity protocols to complete on-chain exchanges of encryption currency.

Ultimately, encryption assets will be sent directly to the user's on-chain wallet address via smart contracts, with the entire process not requiring knowledge of trading pairs, Gas fees, or slippage parameters, nor the need to switch to a centralized trading platform.

It is worth noting that in recent years, traditional payment companies such as Visa and Mastercard have mostly focused their involvement in cryptocurrency on the consumer end, that is, through crypto debit cards that allow users to spend coins, with the backend automatically converting the held digital assets into fiat currency for everyday payments.

However, this collaboration with Mastercard is no longer about using on-chain assets for real-world consumption, but rather directly opening a channel for fiat currency deposits into on-chain assets, allowing non-encryption native users to simply swipe their cards as if shopping online to obtain on-chain assets, without needing to understand any decentralized finance concepts, and in a compliant and transparent manner. This not only breaks the long-standing barriers for decentralized finance users in depositing funds but also provides a compliant, safe, and controllable on-chain channel for the traditional financial system.

The Executive Vice President of Blockchain and Digital Assets at Mastercard stated, "People want to easily connect to the digital asset ecosystem and vice versa. This is precisely why we are continuously leveraging our global payment network and mature experience to bridge the gap between on-chain commerce and off-chain transactions. Through this collaboration, we are opening up a secure and innovative way to fundamentally transform on-chain commerce and drive greater adoption of encryption assets."

Mastercard's encryption strategy focuses on three key areas

"The key issue hindering the mainstream adoption of cryptocurrencies is that it is difficult for users to identify and transfer funds to each other in ways they are familiar with. Mastercard's goal is to become a connector between TradFi and on-chain networks, stimulating new business models while ensuring compliance." The head of Mastercard's encryption and blockchain business recently pointed out that the company has now shifted from the experimental stage to providing practical encryption solutions.

In fact, unlike many traditional financial institutions that still view encryption as a fringe area or regulatory risk, Mastercard is actively advancing its layout in the encryption field, gradually integrating crypto assets, stablecoins, and tokenized assets into the everyday payment experience.

According to a report submitted by Mastercard to the U.S. Securities and Exchange Commission in February this year, the company has made significant progress in achieving its goal of "innovative payment ecosystem," including transaction tokenization, creating solutions to unlock blockchain-based business models, and simplifying access to digital assets. At the same time, Mastercard explicitly pointed out that digital currency has the potential to disrupt the TradFi market and may pose a direct challenge to its existing products. As digital assets offer accessibility, immutability, and efficiency, stablecoins and cryptocurrencies may become more popular as they are regulated, becoming competitors in the payment industry.

Before the reality of buying coins with a card, Mastercard has been promoting the commercialization of encryption payments, collaborating with multiple encryption companies to launch co-branded encryption debit cards, allowing cardholders to spend directly with cryptocurrency, while the backend automatically completes fiat currency conversion.

Moreover, in the layout of encryption payments, stablecoins are becoming the strategic core of Mastercard's on-chain settlement. Mastercard has joined a stablecoin alliance initiated by multiple institutions to jointly mint and share interest earnings linked to U.S. Treasury bonds. At the same time, Mastercard will support multiple stablecoins and integrate them into its own cross-border payment network. In addition, Mastercard has collaborated with several encryption payment companies to launch new stablecoin payment cards, allowing users to make stablecoin payments at over 150 million merchants worldwide, with transactions automatically converted to fiat currency.

These intensive actions indicate that Mastercard is incorporating stablecoins into users' daily consumption, settlement, and transfer activities. To enhance the security of encryption asset transactions and user-friendliness, Mastercard previously launched crypto vouchers, which reduce the chances of errors during cryptocurrency transfers by replacing complex wallet addresses with easy-to-use aliases.

In addition to stablecoins, Mastercard is also vigorously promoting the construction of asset tokenization. In April this year, Mastercard revealed that it is developing a multi-token network aimed at replicating its traditional payment network to provide digital asset transaction infrastructure for consumers, merchants, and financial institutions. The system will integrate on-chain and off-chain asset flows, ensuring compliance and optimizing user experience. Mastercard has collaborated with several financial institutions to explore scenarios such as cross-border payments and carbon credit tokenization, and has applied for over 250 blockchain-related patents since 2015.

"We believe that the future financial system will include both bank deposits and stablecoins. Deposits are the foundation of funds, while stablecoins provide efficient on-chain settlement capabilities. If there can be more regulatory clarity in the future, allowing deposits to be represented in some form on public chains, this will be key to the large-scale expansion of tokenization." A Mastercard executive revealed that the company has set its 2025 strategic focus on three major areas: on-chain/off-chain capital inflow and outflow, promotion of encryption certificates, and application of stablecoins. Currently, Mastercard supports financial institutions in using stablecoins for transaction settlements and plans to announce more partnerships and application scenarios this year to continue advancing the integration process of encryption.

In the accelerated process of the integration of TradFi and the encryption field, Mastercard is breaking through in three major areas, building its own encryption business landscape.