Mastercard Partners with Ondo Finance to Integrate Tokenized US Treasuries into its Multi-Token Network (MTN)

This collaboration marks the first integration of tokenized US Treasury bonds into a major global payment network. The partnership will enable businesses to access yield-bearing digital assets through Mastercard's infrastructure.

Mastercard is integrating tokenized real-world assets (RWAs) from Ondo Finance into its Multi-Token Network (MTN). This move will introduce the first tokenized US Treasury bonds onto a major global payment network.

The partnership will provide businesses with access to yield-bearing digital assets using Mastercard's infrastructure and connect Ondo's assets to MTN participants. The integration of Ondo's Short Term US Treasuries Fund (OUSG) into MTN will expand the network's capabilities beyond stablecoins and central bank digital currencies (CBDCs).

"We are aiming to create a network that can deliver unparalleled financial flexibility and 24/7 access to businesses worldwide," said Raj Dhamodharan, Mastercard's Executive Vice President, Blockchain and Digital Assets.

Ondo specializes in converting traditional financial instruments into blockchain-compatible tokens. Its OUSG product tokenizes shares of a fund holding short-term US Treasury bonds and repurchase agreements.

This tokenization is primarily through BlackRock's USD Institutional Digital Liquidity Fund (BUIDL). Funds from Franklin Templeton, WisdomTree, and other institutional managers further diversify the fund's assets.

OUSG offers composability and 24/7 subscription/redemption capabilities, allowing businesses to manage treasury operations without constraints from traditional market hours.

The partnership marks the first integration of tokenized US Treasury bonds into a major global payment network. It will enable businesses to access yield-bearing digital assets.

Mastercard's MTN is a blockchain-based platform designed to streamline cross-border transactions and enhance interoperability between traditional financial institutions and digital asset systems.

The network leverages API-enabled tools to facilitate secure, scalable settlements while adhering to fully compliant and regulated financial products and services.

MTN is a hybrid model that combines the strengths of both traditional and decentralized finance to create a seamless and efficient ecosystem for financial institutions and businesses.

Earlier this year, Mastercard announced its entry into the RWA space with plans to launch a program for banks to easily integrate tokenized assets into their payment flows.

This partnership is a significant step in that direction, and it could open up new possibilities for financial institutions and businesses to engage with the metaverse and Web3.

The partnership also highlights the growing interest in tokenization as a means of improving efficiency in the capital markets.

As major payment networks compete to develop blockchain-integrated financial services, MTN's hybrid model could set a precedent for future integrations of TradFi and DeFi infrastructures.

However, regulatory uncertainties remain a factor. OUSG is not registered under US federal or state securities laws. This constraint might limit OUSG's availability to non-US entities and unaccredited investors.

Moreover, any potential issues arising from OUSG might reflect on Mastercard's involvement in the Multi-Token Network.

This partnership marks a significant step in the development of blockchain technology and its applications in the financial sector. It will be interesting to see what other innovations Mastercard and Ondo have in store for the future.

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