Crypto: Visa partners with blockchain company to pilot CBDC platform

Yahoo Finance’s David Hollerith joins Yahoo Finance Live to discuss crypto and Visa’s partnership with ConsenSys.

Video Transcript

ZACK GUZMAN: Well, adoption with some pretty big players in the financial space continues to grow when it comes to crypto. Visa announcing that it is going to be partnering up with major blockchain player Consensus to help build out technology for what we've all been waiting for in terms of Central Bank Digital Currencies, CBDCs, as we await the Fed's latest update on what they think about those and how they might compete with stablecoins out there.

And for more on that, I want to bring on Yahoo Finance's David Hollerith. And David, out of all the stories I think in crypto, this one is really getting into the inside plumbing of some of the concepts at hand here. But it includes some pretty large names. And any time we talk Visa, we've got to learn more.

DAVID HOLLERITH: Sure, yeah. So Visa partnered with blockchain software company Consensus. And sort of the idea of the partnership is to create a pilot program sort of platform, where central bank digital currencies could sort of be experimented with by central banks. So this is similar to what Mastercard has offered for about a year now. And it's set to be launched in the spring. And the idea behind it, sort of, is that it sheds a little bit more light about how these CBDCs, the Central Bank Digital Currencies, might actually get into or be distributed into the existing financial system.

So the idea, I guess, Zack, is that, you know, the key being that everybody-- I say everybody-- 87 different countries are sort of talking about issuing these CBDCs. And they're taking a wide range of approaches. And the money in general could mean a lot of different things. And so this is sort of maybe an idea for the private sector to get in on the action and also sort of maybe create an easier way for it to work with our existing system so that, you know, I guess, maybe the financial intermediaries aren't cut out is the thinking.

ZACK GUZMAN: Yeah, and I guess, you know, too, I mean, as we've covered, really, as it kind of grew in terms of maybe an issue to watch, you know, Tether has been the biggest stablecoin for a long time. And then questions around what exactly the deposits look like kind of gave rise to USDC, a Circle stablecoin that really works closely with Coinbase.

And you think about on-ramps, really, for people crossing over, I mean, that's generally how maybe most people might think about entering the crypto space, is buying a stablecoin since it's supposed to be just $1 all the time versus maybe Bitcoin. I mean, what do you think maybe some of those changes might do to maybe make the on-ramp easier maybe for people to finally access crypto?

DAVID HOLLERITH: Yeah, it's hard to imagine how CBDCs will fit into this. We heard at his hearing earlier this week, the Fed Chair sort of point out that, you know, CBDCs, stablecoins, could co-exist sort of in the financial system. And, you know, this is obviously what Visa's thinking, too. They settle transactions in USDC, the stablecoin. So they're clearly optimistic about opening it up in general.

One interesting fact is that most of these-- this type of project is sort of assumed via Consensus's protocol, which is called Quorum, which is basically Ehtereum designed in a way that's permissioned so that central banks could sort of design how they want the money to function. But they have similarities to Ethereum, and there's a possibility for a bridge, which is sort of interesting. Whether or not a central bank would want to create something like that for their currency definitely remains to be seen.

ZACK GUZMAN: Yeah, from one sandbox, I guess, where they have total control to another where they don't, we'll see if kind of some of that crossover persists. But David Hollerith bringing us the latest--