What crypto gets right: Raj Kumar, Elisabeth Carpenter, Linda Kirkpatrick | #GIGS25

Sure.

Thank you Raj and thanks for doing this, and thanks to Elizabeth. A great partner and a quick friend. We have a lot in common, not just in our personal lives but in our professional lives. As you said Raj, we're in different spaces but our spaces are colliding. Why is that? One, it's because we both have the same mission to democratize payments, to bring more people into the financial mainstream, and to make it more accessible, more transparent, more secure. The second I'd say is this thing is so great because it offers choice. Choice in what's so fundamental: consumers and small businesses will decide how they want to pay and be paid. Stablecoin/crypto/blockchain technology enables that choice and enables an environment of competitive payments, which of course we all love. When we offer choice, everybody wins.

These use cases are not only fun to talk about, they're very moving to talk about, and they underscore the fact that this is technology that's here now. It's not like we're talking about something in the future. We're still early, but we are enabling aid disbursement, for example, which is a fantastic use case to look at as an illustration of how this all works and how crypto can get it and is getting it right. First, to explain for a second: we manage something called USDC, which is the world's largest regulated US dollar token coin. What that means is you give us a dollar and in exchange we give you a digitized form of a dollar only ever worth a dollar. Nothing speculative about this. Same thing for euros as well. Because that dollar is digitized, it has the superpowers of the internet. In the same way that you don't think about the cost of sending an email or WhatsApp message, you just send it and it works, money moves the same way now. The example with Venezuela is a great lens through which we can see that. Starting in COVID, frontline healthcare workers in Venezuela were not getting paid and needed help. In partnership with a certain consortium here in the US, entirely blessed, everything we do is regulation first, we enabled taking that money, digitized it into USDC, and we were able to go right over the top into their phones. They could get that aid. Over the years, it's really empowering because these people, even if they were getting paid, the currency was fluctuating all over the place. By having USDC in their digital wallets, they could go and either pair it with a credit card and use online, exchange it amongst themselves, go to a kiosk and cash it out. Many different ways of turning that into fiat money they could use locally. They had access to the dollar and something that was stable.

Trust, as we know, is so hard to earn and very easy to lose. What defines trust for us is putting the customer at the center of everything we do and delivering for that customer reliably, stably, consistently over and over again. For us, trust is everything. We've had several decades in the market to facilitate trust, and our brand is now synonymous with that. When you think about Mastercard, we sit the role we play as a network synthesizer. We facilitate the flow of payments between buyers and sellers seamlessly, securely across 150 million merchant locations around the world. When you're talking about the Venezuela example, it's a phenomenal, life-changing, transformative example. But if those individuals don't have a place to leverage the currency they've been given, the ecosystem falls apart, then you lose trust. What we do so well is that last mile distribution, that acceptance network, the interoperability, the ubiquity that creates trust, the consistency of doing it over and over again globally. At Mastercard, we are very excited about the promise of stablecoin because we see it as an extension of what we're already doing as a network provider, a natural extension into crypto. To make it real for everyone, show of hands, how many in the room have bought or sold cryptocurrency? About 7-8% raised their hands. If I asked why you haven't, you might say 'I don't know if I can trust the exchanges, I don't know how to use it, I don't know how to access it.' We've been demystifying that, working with partners like Circle to democratize crypto across channels you're familiar with. Do you know you can use your card to purchase cryptocurrency? Do you know you can use your card to earn rewards on crypto and then use that crypto in any location where Mastercard is accepted? Do you know you could use our technology to transfer crypto and stablecoin across borders? Most people don't. When you break it down into digestible ideas and insert trust, that's where the magic of crypto comes to life.

I think the last mile is a really important piece. We're B2B, not B2C. Finding last mile partners is the most important thing in many respects that we can do. I feel incredibly confident in saying this is the way money will move. Imagine meeting me in 1997 and I'm saying this is the way content will move, this internet thing is the way money will move for all of us. You don't necessarily need to know that. A refugee using a credit card backed by USDC may not realize that US dollar got into their wallet at 35% of the cost at T+1, not 14 or more, instantly, securely, safely, transparently, so the organization trying to get money from A to B, this is not pallets of cash being dropped across borders. Because it's all based on smart contract technology, it's programmable. The organization, whether it's a UN example, can see it going from A to B. Then the question is what do they do with it? There's a variety of partners they can leverage. Over time, it simply isn't going to matter. You'll have it in your digital wallet just like you might have your Mastercard on your iPhone, not even the plastic anymore, just tapping and paying. You don't know how it gets from your phone to the merchant. It just works. Something like USDC will be powering transactions behind a Mastercard sitting on your phone. The trust piece is important because we've spent more than a decade building trust through regulation, making sure it's safe and secure. We go in the front door of regulators and policymakers. That's important because for us, we don't have a worldwide brand like yours. We have to build it, and trust is the ultimate currency. If there's no trust in that digital dollar, it's game over.

Many people have been craving some guard rails and rules of the road around how to transact. Part of building trust is knowing there's an infrastructure and rules of the game that everybody can play by. If there's fraud on a transaction or a dispute, there are rules that protect people's money. For those of us that didn't raise our hands, if you can't rely on some framework or guard rails, you're less reluctant to participate in that ecosystem. It'll be interesting to see how regulation evolves. From our perspective, we're excited to work with governments and central banks around the world to cultivate this. We're excited that the administration wants to bring in the private sector because in this space, innovation can only happen when partnerships happen. No one has it all solved on their own. The opportunity to get access to the people making the framework happen is very exciting.

I think we are trying to model ourselves on the world's best brands that have imbued trust and earned it from their very large consumer bases, like a Mastercard. That's really important because with money, if you don't trust it, it is game over. When you're creating a new form of money based on an old form of money but supercharging it with the superpowers of the internet, so it can fly around the world like a WhatsApp message, safe and secure, we need to model ourselves on the best brands to see what they've done to earn that trust. This is one reason it was clear from the very beginning that you cannot do this and be taken seriously if you're not regulation first. Regulation breeds innovation. I'm not going to get on an airplane the FAA hasn't blessed. I'm not going to use a credit card that I know is protecting me.

I think the beauty of this inflection point is that you have a willingness across an ecosystem to take the history, longevity, and consistency of financial markets and marry it with modern-day tech, getting the best of both worlds. The scale, ubiquity, and cross-border nature of the work already done to create our financial infrastructure can take a nascent currency and turn it on fire. That's the most exciting part of where we are in this journey.

Super.