Mastercard’s BVNK acquisition shows stablecoins are catching on

Mastercard’s planned purchase of stablecoin infrastructure company BVNK for $1.8 billion is the latest signal that the payments industry expects the digital currency will have a greater role in everyday commerce.

CFOs, however, will have some questions.

As stablecoins—a cryptocurrency usually pegged to fiat currencies like the dollar—gain a larger economic foothold, CFOs will want assurance that they’re “fully backed” and that they know how to redeem that value, according to a digital-assets expert.

“If you are a holder of a stablecoin, your key concern is that [you] can redeem that stablecoin within the terms…and the money is there to redeem it,” Di Krupica, AICPA senior manager of assurance and advisory innovation, specializing in digital assets, told CFO Brew.

Meanwhile, it’s up to the finance function of stablecoin issuers to ensure their product “is fully backed by high quality, liquid assets,” Krupica added.

“Without consistent, transparent disclosures of the stablecoin, it becomes really difficult for the issuer to demonstrate that redemption assets are sufficient, that they’re appropriately safeguarded, and they’re available for redemption in accordance with their terms.”

According to payment processing company Stripe, stablecoins allow companies to “move money fast, cheaply, and across borders more easily.” For instance, a business can pay an overseas supplier in minutes, not days, by using digital currency. SpaceX reportedly converts Starlink customer payments into stablecoins.

BVNK is one of the platforms that facilitates the sending and receiving of payments on major blockchain networks.

Last year’s Genius Act established regulatory guidelines for stablecoins, bringing needed clarity for stablecoin issuers and holders, according to Krupica. The AICPA has recently issued two batches of stablecoin reporting guidelines, which address “the need for well-designed and effectively operating controls.”

“Finance teams really need to build and maintain this clear framework for identifying and assessing and managing these risks across the entire stablecoin life cycle,” Krupica said. The SEC and CFTC this week released an interpretation of crypto assets, providing a “token taxonomy” of stablecoins, digital securities, and other items.

Zoom out. In the BVNK deal announcement, Mastercard cited a Boston Consulting Group study that estimates payments using digital currency reached at least $350 billion last year. BCG also noted that “digital currency appears poised to lead the next wave of innovation in money movement,” and said “stablecoins are a major component of this story.”

The deal comes not long after Mastercard announced a global partnership with 85+ digital asset and crypto firms “to bridge the gap between traditional and non-traditional payment methods,” according to Bloomberg.

“We expect that most financial institutions and fintechs will in time provide digital currency services, be it with stablecoins or tokenized deposits,” Jorn Lambert, Mastercard’s chief product officer, said in a statement.

PayPal also had some stablecoin-related news last week. The fintech announced its own stablecoin, called PayPal USD, that’s “available in 70 markets worldwide.” May Zabaneh, PayPal SVP and general manager of crypto, said in a statement that “consumers and businesses around the world are looking for faster, more seamless ways to transact globally.”