Mastercard seeks patent for fractional reserve banking for cryptocurrency. Mastercard, a multinational financial services corporation based in the US, filed a new patent application that was published on October 25th.
According to the patent published by the US Patent & Trademark Office (USPTO), the payment processor has future plans to allow merchants to interact with what it calls “blockchain currencies” via a new method of simultaneous crypto and fiat storage. Specifically, a reference of “methods for managing fractional reserves of blockchain currency” was of noted interest.
Mastercard has been unclear in the past on its stance on cryptocurrency the last few years. The confusion lies as to the actions of Mastercard itself – winning a blockchain-related patent while signalling it may classify cryptocurrency and ICOs as “high-risk”.
In its new patent filing, Mastercard seems like it wants to apply principles of the fiat banking system to cryptocurrency – the principles being “specially designed and configured to safely store and protect consumer and merchant information and credentials.”
The patent filing continues saying: “The use of traditional payment networks and payment systems technologies in combination with blockchain currencies may provide consumers and merchants the benefits of the decentralized blockchain while still maintaining security of account information and provide a strong defense against fraud and theft.”
While Mastercard delving into cryptocurrency and finding solutions to offer its services via cryptocurrency is bullish, Mastercard’s intent is somewhat surprising. Fractional reserve banking, where there is not proof that a lender has the funds which correspond to a customer’s promised holdings, has problems in of itself due to it not being known if funds are available and or good. Bitcoin and other cryptocurrencies provide a clear and transparent solution to it via its decentralized public ledger.
Notably, Noble Bank, the former main reserve bank for Tether (USDT), had claimed it did not use fractional reserve and could prove it had one dollar for each USDT token. A public audit has not yet been complete on USDT and its US Dollar reserves.
What do you think? Is this a good thing? Do you think Mastercard will lead the way for seamless mass adoption by allowing cryptocurrencies to be spent at merchants that accept Mastercard? We’ve talked about how mass adoption could slowly be arriving – up to 100k ATMs will have the capability to be programmed to allow purchases of Bitcoin soon. Monero has recently cut transaction fees by 97% via its Bulletproofs. What cryptocurrencies do you think will be used in Mastercard’s program, if successful? Let us know on our Facebook page!
