Reserve banking

Mastercard patent claims cryptocurrency can benefit fractional reserve banking

U.S. multinational financial services firm Mastercard wants to apply fractional reserve banking principles to cryptocurrency, news patent application released Thursday, October 25 reveals.

According to the document, released by the United States Patent and Trademark Office (USPTO), the payment processor plans to allow merchants to interact with what it calls “blockchain currencies” via a new method of crypto concurrent storage. and fiat.

More specifically, it is referred to as “blockchain currency fractional reserve management methods”.

Mastercard has offered a mixed public stance on cryptocurrency in recent years, winning another blockchain-related patent this month, while signaling with Visa that it may rank cryptocurrency and ICOs as “high. risk ”.

In its new case, the company appears to want to apply the principles of the fiduciary banking system, which it considers “specially designed and configured to securely store and protect the information and credentials of consumers and merchants.” The patent filing continues:

“[…]The use of traditional payment networks and payment system technologies in combination with blockchain currencies can offer consumers and merchants the benefits of decentralized blockchain while maintaining the security of account information and providing a strong defense against fraud and theft.

The concept may surprise some commentators, because fractional-reserve banking – where there is no evidence that a lender has funds that match a customer’s pledged holdings – already has a seamless Bitcoin solution.

Noble Bank, the former main reserve bank for crypto stablecoin Tether (USDT), theoretically pegged to the US dollar, had claims he didn’t use a fractional reserve and could prove he had a dollar for every USDT token, although the stablecoin project avoided going through a public audit.


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