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Mastercard chief digital officer believes tokenization needs TradFi rules to go mainstream Mastercard chief digital officer believes tokenization needs TradFi rules to go mainstream

Mastercard chief digital officer believes tokenization needs TradFi rules to go mainstream

Jorn Lambert says blockchain technology presents significant benefits and can easily improve cross-border payments, trade, finance, insurance, and capital markets, but insisted that legacy systems will still have a role to play.

Mastercard chief digital officer believes tokenization needs TradFi rules to go mainstream

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Mastercard believes that blockchain technology can revolutionize payments, but it needs “financially-regulated applications” and “central bank-backed money” to achieve mainstream adoption, according to chief digital officer Jorn Lambert.

In an interview with PYMNTS, Lambert expressed confidence that digital assets and blockchain technology could become integral to the Internet of finance but stressed that mainstream adoption would require an unprecedented level of scale and trust in the system.

According to Lambert:

“Until there exists the ability to actually develop financially-regulated applications on the blockchain, the benefits will never go mainstream.”

He added that there is a โ€œhuge trust deficitโ€ in the crypto space, which needs to be shored up before digital assets can become a viable alternative to traditional financial instruments.

However, despite these issues, Lambert lauded tokenization and its potential applications in the financial industry, arguing that blockchain technology presents significant benefits and can improve cross-border payments, trade, finance, insurance, and capital markets.

TradFi is the answer

Lambert said that the world’s economy is currently “powered by commercial bank money,” which needs to be tokenized and brought onto the blockchain for the digital assets movement to achieve a meaningful impact.

He believes the scalability problem can be solved by bringing the traditional financial industry and the emerging fintech sector into the fold and creating a framework of regulations that can alleviate their concerns around safety and security.

Lambert said:

“They [TradFi] are unable to come to the table today because there isnโ€™t the framework for them to operate in a safe environment.”

He added that the blockchain ecosystem needs central bank-backed money and regulated financial assets to scale, and TradFi institutions are the primary custodians of both.

According to Lambert, this will also increase trust in the ecosystem by showing the mainstream public that trusted institutions are willing to engage with it, and that there are sufficient safeguards in place.

He said:

“This is about peopleโ€™s money, peopleโ€™s livelihood. We need to bring trust back into the system, and we need to bring the right frameworks for financial institutions to play ball as well.”

Many central banks around the world believe this issue can be solved by transplanting fiat money onto the blockchain.

However, Lambert does not believe that a central bank digital currency (CBDC) is the answer to the adoption and trust problem. He said that CBDC projects are too limited by geography in their scope, which makes them a poor choice for global payments, concluding, “If it doesnโ€™t scale, then it doesnโ€™t matter.”

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