Mastercard Triumphs in Wrapping CBDCs for NFT Purchases

Mastercard, in collaboration with the Reserve Bank of Australia, successfully trials wrapping CBDCs on various blockchains.

exchanging crypto coins

A global leader in payment solutions, Mastercard, has recently unveiled the successful results of a groundbreaking trial involving the wrapping of central bank digital currencies (CBDCs) on multiple blockchains, akin to the mechanism behind wrapped Bitcoin (wBTC) and wrapped Ether (wETH). This innovative experiment, conducted with the Reserve Bank of Australia (RBA) and Australia’s Digital Finance Cooperative Research Centre CBDC, alongside Cuscal and Mintable, has opened up new vistas in the realm of digital currency and non-fungible tokens (NFTs).

The trial, as per the announcement on October 12, was not merely a theoretical exercise but was executed in a live environment, demonstrating the practical applicability of the technology. It showcased the ability of a CBDC owner to purchase an NFT listed on Ethereum, one of the most widely used blockchains. The process involved “locking” the requisite amount of a pilot CBDC on the RBA’s platform and minting an equivalent amount of wrapped pilot CBDC tokens on Ethereum.

This experiment was not only a technological feat but also a testament to the secure and controlled environment in which the transaction took place. The Ethereum wallets of both the buyer and seller, as well as the NFT marketplace smart contract, were “allow-listed” within the platform, ensuring that all other transfers of the wrapped pilot CBDC were blocked. This demonstrated the platform’s capability to implement controls even on public blockchains, ensuring the security and legitimacy of transactions.

Mastercard’s Multi Token Network, introduced in June 2023, played a pivotal role in this trial, amalgamating payment technology with blockchain capabilities. Zack Burcks, CEO and founder of Mintable, remarked, “Together with Mastercard, we have identified a use case whereby digital currencies and NFTs can easily be linked, potentially stamping out fraud and theft, ending the loss of documentation and records, and unleashing new possibilities for commerce.”

The Reserve Bank of Australia has previously acknowledged that an Australian dollar CBDC could potentially facilitate complex payment arrangements and spur innovation in the finance sector in ways that cannot be replicated by fiat money. However, the central bank has also emphasized that “more research” is imperative to assess the benefits thoroughly.