Mastercard’s Chief Digital Officer, Jorn Lambert, believes that blockchain technology has the potential to revolutionize the payments industry. However, Lambert emphasizes that for this technology to achieve mainstream adoption, there is a need for “financially-regulated applications” and “central bank-backed money.” In an interview with PYMNTS, Lambert expresses confidence in the integration of digital assets and blockchain technology into the Internet of finance. Nonetheless, he highlights that widespread adoption would require an unparalleled level of scale and trust in the system.
According to Lambert, the benefits of blockchain technology will never become mainstream until there are financially-regulated applications developed on the blockchain. He points out that there is a significant “trust deficit” in the crypto space that needs to be addressed before digital assets can become a viable alternative to traditional financial instruments. Despite these concerns, Lambert praises tokenization and its potential applications in the financial industry. He believes that blockchain technology offers significant benefits and can enhance cross-border payments, trade, finance, insurance, and capital markets.
Tokenization and Bringing Traditional Finance onto the Blockchain
Lambert argues that the world’s economy currently relies on commercial bank money, which needs to be tokenized and brought onto the blockchain for the digital assets movement to have a meaningful impact. He suggests that the scalability challenge can be overcome by integrating the traditional financial industry and the emerging fintech sector, establishing a framework of regulations that address their safety and security concerns.
However, Lambert acknowledges that traditional financial institutions (TradFi) are currently unable to participate due to the lack of a safe operating environment. He asserts that the blockchain ecosystem requires central bank-backed money and regulated financial assets to scale, and it is the responsibility of TradFi institutions to act as custodians of both. Lambert believes that this approach will enhance trust in the ecosystem by demonstrating to the mainstream public that trusted institutions are willing to engage with blockchain technology, and that appropriate safeguards are in place.
Lambert emphasizes the importance of building trust and implementing the right frameworks for financial institutions to participate. He states that this is about people’s money and livelihoods, and the focus should be on bringing trust back into the system. Lambert suggests that central banks can play a crucial role in solving this issue by incorporating fiat money onto the blockchain. However, he does not consider a central bank digital currency (CBDC) to be the solution to the adoption and trust problem. Lambert argues that CBDC projects are limited by geography, making them unsuitable for global payments. He concludes that scalability is essential, stating, “If it doesn’t scale, then it doesn’t matter.”
The Role of Trust and Safety in Mainstream Adoption
To achieve mainstream adoption of blockchain technology in the payments industry, trust and safety are crucial factors. Lambert highlights the need for financially-regulated applications and central bank-backed money on the blockchain. This will address the trust deficit in the crypto space and provide a secure environment for traditional financial institutions to participate.
Lambert believes that tokenization can significantly benefit the financial industry by enhancing cross-border payments, trade, finance, insurance, and capital markets. However, for tokenization to have a meaningful impact, it is necessary to bring traditional finance onto the blockchain. This can be achieved by establishing a framework of regulations that ensure the safety and security of financial institutions.
Overcoming the Scalability Challenge and Gaining Trust
The scalability challenge is a significant hurdle in the widespread adoption of blockchain technology. Lambert suggests that integrating traditional financial institutions and the emerging fintech sector can help overcome this challenge. By incorporating central bank-backed money and regulated financial assets, the blockchain ecosystem can scale effectively.
Furthermore, Lambert emphasizes the importance of gaining trust in the blockchain ecosystem. This can be achieved by demonstrating to the mainstream public that trusted institutions are actively engaging with blockchain technology. Implementing the right frameworks and safeguards will build confidence and encourage wider adoption.
Mastercard acknowledges the potential of blockchain technology to revolutionize payments. However, for this technology to achieve mainstream adoption, there is a need for financially-regulated applications and central bank-backed money. Tokenization and bringing traditional finance onto the blockchain are crucial steps in realizing the benefits of blockchain in the financial industry. By addressing the scalability challenge and gaining trust through the participation of trusted institutions, blockchain technology can have a meaningful impact on the payments industry.