In today’s Finshots, we explain why Mastercard is betting on stablecoins and how it might change how money moves.

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The Story

If we were to imagine crypto and traditional finance in the same room, we’d probably picture two neighbours who awkwardly avoid eye contact. One is all about rules, audits and centralised control while the other one is about decentralisation, anonymity and big price swings.

But that’s changing. Because now Mastercard has decided to open its doors to stablecoins. Yes, the same Mastercard sitting quietly on your debit or credit cards and handling over 170 billion card transactions a year.

It’s partnered with some big crypto companies — OKX, MetaMask, Binance, Crypto.com. These are nothing but cryptocurrency wallets and exchanges used by millions. And through Mastercard’s new partnerships, users of these platforms will be able to spend stablecoins at any of the 150 million merchants that accept Mastercard globally. Merchants don’t have to convert those coins to dollars or rupees. They can choose to settle directly in stablecoins. And for someone new to this and nervous about sending money to a scary crypto address like 0x9A81cD12d6Ff... (the way crypto fund transfers work), Mastercard came up with a simpler solution called Crypto Credential. You know, like @monish.eth or @suman.matic. Much easier.

And just like that, a deeply traditional payments company has now decided to go full on stablecoins.

Which begs the question… Why now?

Let’s take it from the top.

First, let’s talk about stablecoins. These are digital tokens pegged to a real-world currency – typically the US dollar. The deal is simple: 1 stablecoin = 1 dollar. You give the issuer a dollar, they give you a stablecoin token. This could be anything from Tether (USDT), Circle (USDC), Ethena (USDE), etc. And when you return the token, they give you the dollar back.

So unlike Bitcoin, which can swing 10% in an hour, stablecoins are... stable. One coin equals one dollar. Always. And that makes them perfect for things like sending money, paying bills or settling trades. An easy way to understand them is to imagine a token that behaves like crypto (borderless, anonymous, decentralised, fast), but feels like cash.

And they’re catching on fast. Total stablecoin supply has grown from 2 billion in 2019 to over 200 billion in 2025. In 2024, the total transfer volume of stablecoins reached over $27 trillion. That’s more than Visa and Mastercard combined!

And it’s not just utility that’s driving this boom. It’s also the money behind the money.

See, when you buy a stablecoin, the issuer doesn’t stash your dollar under a mattress. They usually invest it in US Treasuries — safe government bonds that currently yield around 4%. So when a company like Circle (which runs the USDC stablecoin) is sitting on tens of billions of dollars in customer funds, that interest adds up fast. In fact, Circle made $1.6 billion last year. Just by parking customer funds in Treasuries. And today, stablecoin issuers like Circle and Tether are among the top 20 holders of US government debt.

And if all that wasn’t enough, the rules are catching up too.

Governments are bringing stablecoins under formal supervision. The US is working on legislation that would require issuers to be fully licensed, regularly audited and maintain 100% cash-equivalent reserves. Thailand’s SEC has even approved USDC and USDT for trading on local exchanges.

So there’s utility, regulation, momentum and a whole lot of money.

That’s the reason why Mastercard doesn’t want to miss this bus.

And it’s not alone. PayPal jumped in last year with its own stablecoin — PYUSD, and baked it into Venmo, PayPal checkout, and so on. But PayPal’s model is a bit of a walled garden. Everything happens within its own ecosystem.

Mastercard, on the other hand, is playing the role of the connector. It doesn’t want to issue a coin. It just wants to let you spend whatever stablecoin you already hold (like USDC, USDT, PYUSD) wherever you want.

And that seems like a clever move. Because you see, at its core, Mastercard is a payments facilitator. And stablecoins offer faster, cheaper, borderless payments — the kind that legacy systems just can’t match. If it doesn’t embrace this shift, it risks becoming irrelevant, especially with its competitor Visa working on its own stablecoin platform.

So yeah, it changes how money moves.

Then, this stablecoin shift also changes Mastercard’s fundamental architecture.

For decades, Mastercard has run on a closed payments network. You swipe your card, your bank verifies the balance, Mastercard routes the message, and the money moves all within a tightly controlled ecosystem. Stablecoins flip that model on its head because they live on public blockchains. Open networks with no intermediaries or bank approvals. Anyone with an internet connection can send or receive funds.

So Mastercard isn’t just adding a new payment method. It’s plugging itself into a much larger, public payments network. That means a bigger addressable market and broader functionality.

Now, to be fair, cryptocurrencies have always had this potential. But what stablecoins bring is price stability. And what Mastercard brings is simplicity and interoperability. Put together, they make a pretty compelling use case.

But there’s a philosophical contradiction here and a big one at that.

You see, stablecoins were supposed to give people more control over money — to eliminate banks, bypass card networks and escape gatekeepers. But when Mastercard becomes the system deciding which wallets are supported, which coins are allowed, which countries are on the list — aren’t we just back where we started?

It’s the same concern critics raise about CBDCs, or Central Bank Digital Currencies. These are government-issued digital currencies that promise stability and programmability. But critics fear they could also enable governments to track transactions, freeze accounts or set expiry dates on money. And imagine that level of control in private hands — who can issue the tokens and manage the wallets. They become even more powerful than banks. They earn the interest, set the rules and control the flow of money.

And we’ve seen what happens when a private company pushes too far. Remember Libra? Facebook’s grand plan to launch a global currency backed by a basket of assets? It promised financial inclusion and stability. But regulators pushed back and it was shut down because well, nobody wanted a social media company with billions of users launching its own monetary system. So Libra died, but the idea didn’t.

Today’s stablecoins are more regulated, backed by dollars and perhaps that’s why companies like Mastercard are entering the space.

But that doesn’t mean they’re risk-free.

USDT (Tether), for instance, is issued by a private company that’s been under constant scrutiny for years. No one’s quite sure if it’s fully backed, because audits have been... elusive. And let’s not forget Terra’s UST, the infamous “algorithmic” stablecoin that lost its peg in 2022 and wiped out billions. Just like that. It was designed to stay stable by letting traders swap it with another token, LUNA. But when people lost faith in both, they started dumping them en masse. The whole system spiralled, and with nothing real backing it, the value just collapsed.

So yeah, as with most new technology, there is a trade-off.

Mastercard could have stablecoins and that would offer users better speed, efficiency and global reach. But the more stablecoins get absorbed into the old financial system, the more they start looking like it too.

Nevertheless, with big companies now in the mix, this could be a turning point. More payment companies might follow. Some might issue their own dollar-backed stablecoins and collect interest on the reserves.

So yeah, Mastercard’s stablecoin push might look like a neat, little payments update.

But underneath it, there’s a much larger shift. About who gets to move money, who earns from it and who decides what counts as real money in the first place.

Until then…

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