Mastercard’s chief digital officer, Jorn Lambert, believes that blockchain technology has the potential to revolutionize the payments industry. However, he emphasizes the need for “financially-regulated applications” and “central bank-backed money” to achieve mainstream adoption. In an interview with PYMNTS, Lambert expresses confidence in the integration of digital assets and blockchain technology within the Internet of finance. Nevertheless, he highlights the importance of establishing a high level of scale and trust in the system for widespread adoption to occur.

According to Lambert, the benefits of blockchain technology will never reach the mainstream until there is the ability to develop financially-regulated applications on the blockchain. He points out the existence of a “huge trust deficit” in the cryptocurrency space that must be addressed before digital assets can become a viable alternative to traditional financial instruments. Despite these challenges, Lambert recognizes the potential of tokenization and its application in the financial industry. He believes that blockchain technology can greatly enhance cross-border payments, trade, finance, insurance, and capital markets.

The Need for Tokenization

Lambert asserts that the current world economy heavily relies on commercial bank money, which necessitates its tokenization and integration into the blockchain. This movement towards digital assets requires a meaningful impact. To overcome the scalability problem, Lambert suggests bringing together the traditional financial industry and the emerging fintech sector. This collaboration would involve creating a framework of regulations that address concerns related to safety and security.

According to Lambert, the traditional financial institutions (TradFi) are currently unable to participate because there is no safe operating framework for them. He emphasizes that the blockchain ecosystem needs central bank-backed money and regulated financial assets to scale. TradFi institutions are the primary custodians of both. Moreover, Lambert believes that this integration will increase trust in the ecosystem by demonstrating to the public that trusted institutions are willing to engage with it and that there are sufficient safeguards in place. Restoring trust is crucial as it involves people’s money and livelihood. Lambert stresses the need to establish the right frameworks for financial institutions to participate effectively.

Central Bank Digital Currency (CBDC) is Not the Solution

While many central banks propose transplanting fiat money onto the blockchain as a solution, Lambert does not view central bank digital currency (CBDC) as the answer to adoption and trust issues. He argues that CBDC projects are limited by geography, making them unsuitable for global payments. Lambert concludes that scalability is essential, stating, “If it doesn’t scale, then it doesn’t matter.”

In summary, Mastercard’s chief digital officer, Jorn Lambert, acknowledges the potential of blockchain technology to revolutionize payments. However, he emphasizes the importance of financial regulation and central bank-backed money for mainstream adoption. Lambert believes that developing financially-regulated applications on the blockchain is necessary to overcome existing trust deficits in the crypto space. He advocates for the tokenization of commercial bank money and the creation of a regulatory framework to address safety and security concerns. Lambert emphasizes the need to involve traditional financial institutions in the blockchain ecosystem to establish trust and scalability. While he acknowledges the interest in central bank digital currencies, Lambert believes that they are not the solution to adoption and trust challenges due to their limited scope. Scalability remains a crucial factor for the widespread integration of blockchain technology in the payments industry.

Regulation

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