Crypto is an asset class, not a payment instrument, says Mastercard’s CFO

Sachin Mehra – Chief Financial Officer at Mastercard – believes that cryptocurrencies, such as bitcoin and ether, are still too volatile to be classified as a suitable payment instrument. On the other hand, central bank digital currencies (CBDCs) and stablecoins could potentially fit into that role.

Many executives of the payment services giant have shown a pro-crypto stance in recent times, while the company has entered into a series of partnerships that enabled digital asset solutions for users.

Crypto is an asset class, not a payment tool

Mastercard’s CFO – Sachin Mehra – is yet another top executive at the global technology firm who believes in crypto’s bright future. In a recent interview for Bloomberg, he argued that digital currencies can help the transition from cash to electronic forms of settlement.

“If you think about it globally, there’s still a lot of cash that has yet to be electrified,” he maintained.

Despite outlining the benefits of bitcoin and the alternative coins, Mehra believes they are still too volatile to function as payment instruments used by consumers for everyday purchases:

“If something fluctuates in value every day, so that today your Starbucks coffee costs you $3 and tomorrow it’s going to cost you $9 and the day after that it’s going to cost you a dollar, that’s a problem from a consumer point of view .”

That said, the executive classified crypto as an asset class, while CBDCs and stablecoins could “potentially have a little more runway” and serve as payment tools.

Issued and fully controlled by central banks, CBDCs will be a digital version of government-backed fiat money. Under such supervision, these financial products will have a highly centralized character, and strong price fluctuations are not expected.

For their part, stablecoins are tokens whose value is pegged to another asset, often major fiat currencies (such as the US dollar) or precious metals (such as gold). Some examples include the third and fourth largest cryptocurrencies by market capitalization – USDT and USDC – both of which are pegged to the dollar.

Crypto does not pose a threat

Not long ago, Mastercard’s Global Head of Crypto and Blockchain – Raj Dhamodharan – believed that digital currencies could not harm investors “at all”. Moreover, he claimed that they are a “package of multiple technologies”, which makes their nature unique. From an investor’s point of view, he believes they are “probably the most mature” investment tool.

Dhamodharan particularly highlighted bitcoin’s benefits. For him, the primary digital asset is much more than just a currency:

“Bitcoin is not just about the currency. It’s also about the chain. It’s also about the cryptology behind it and the decentralization and all that.”

He also spoke highly of non-fungible tokens (NFTs), calling them a “great invention” as they rank as the “next mature investment asset class” after cryptocurrencies.