FCA probe clouds Mastercard US Treasuries tokenization pilot success

Mastercard is under investigation by the United Kingdom’s Financial Conduct Authority (FCA) for alleged anti-competitive conduct tied to digital wallets. The news landed as the payments giant joined JPMorgan, Ripple and Ondo Finance in completing what they call the first cross-border, cross-bank redemption of tokenized US Treasuries. 

Mastercard is not alone in the latest FCA probe, as the regulator is also investigating Visa and PayPal under the Competition Act 1998. 

Mastercard and Visa are both being investigated under Chapter I, which targets anti-competitive agreements, and Chapter II, which addresses the abuse of a dominant market position. The probe touches on contractual arrangements connected to the funding and usage of PayPal’s digital wallet.

The regulator stated that it is yet to reach any conclusions or make any findings that point to the companies breaking any competition law. The investigation became public after PayPal disclosed in an SEC filing that it had received notices in March about the FCA’s inquiries into its contractual agreements with Mastercard and Visa.

A Mastercard spokesperson stated that they are cooperating and working with the regulator to ensure that they meet the standards of competition law. Visa and PayPal also stated that they are cooperating as well.

Digital wallet usage is climbing in the UK

The probe follows a joint report by the FCA and the Payment Systems Regulator last year that flagged competition concerns in the digital wallet market. Card transactions processed through digital wallets have been on the rise, with 2023 data showing a jump from 8% to 29%. PayPal allows users to host as many as 24 cards in their wallet at no extra cost, making it appealing for more transactions. 

The regulators had previously stated that they had heard calls for stronger competition among wallet providers to allow new entrants and spur innovation.

In January, 2025, the Competition and Markets Authority (CMA) opened a separate inquiry into Apple and Google’s mobile ecosystems, including their digital wallets. The two tech giants reportedly made commitments to the CMA in February 2026 to improve fairness in app store processes and enhance interoperability.

Across the Atlantic, Mastercard helps tokenize Treasuries

Hours before the FCA announcement, Mastercard was part of a consortium that completed a pilot transaction representing a different kind of financial infrastructure push. Ondo Finance, Kinexys by JPMorgan, Mastercard, and Ripple (XRP) executed what they say is the first near-real-time, cross-border redemption of a tokenized US Treasury fund.

The operation reportedly started with Ripple redeeming a portion of its holdings in Ondo’s Short-Term US Government Treasuries fund (OUSG), which exists on the XRP Ledger. Mastercard’s Multi-Token Network triggered the associated dollar payment. 

JPMorgan’s Kinexys blockchain infrastructure then moved the funds through its correspondent banking network, settling US dollar proceeds to Ripple’s bank account in Singapore.

The fiat settlement side still moved through traditional banking rails, meaning the transaction was not fully decentralized.

“This milestone represents the first time tokenized U.S. Treasuries have settled across borders and banks in near real time and outside traditional banking windows,” said Ian De Bode, president of Ondo Finance.

Tokenization still small but gaining momentum

Institutional interest is on the rise, with the total value of tokenized real-world assets (excluding stablecoins) sitting at roughly $31 billion globally. The Depository Trust and Clearing Corporation announced earlier this week that it would launch a tokenization service in October, with permission to tokenize Treasury bills and bonds. Nasdaq has said it is pursuing tokenized trading of stocks and ETFs.

Regulatory clarity in the space still remains the key obstacle. The CLARITY Act, a market-structure bill that would define which US federal agencies oversee different parts of the crypto market, has passed the House but awaits Senate action, with its future looking uncertain.

Mastercard’s position captures a tension running through global finance. In the UK, regulators are scrutinizing the company’s existing payment arrangements for possible competitive harm. In the US, it is building the rails for a new class of financial infrastructure that UK regulators have been slower to engage with.

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