FCA probes Mastercard over digital wallets; Treasury token pilot

The U.K. Financial Conduct Authority has opened an investigation into Mastercard over alleged anti-competitive agreements linked to digital wallets. The inquiry also covers Visa and PayPal and focuses on contractual arrangements related to the funding and use of PayPal’s digital wallet. The FCA is investigating under Chapter I and Chapter II of the Competition Act 1998, which address anti-competitive agreements and abuse of a dominant market position. The regulator has not reached any conclusions. PayPal disclosed in an SEC filing that it received notices in March about the inquiries. Mastercard confirmed it is cooperating with the FCA. Visa and PayPal have indicated they are cooperating with the regulator as well.

The probe follows a joint report by the FCA and the Payment Systems Regulator that identified competition concerns in the digital wallet market. Card transactions processed through digital wallets in the U.K. rose from 8% to 29% in 2023. PayPal’s wallet lets users store up to 24 payment cards at no additional cost, a feature the regulators cited when discussing market dynamics and barriers for new entrants. The Competition and Markets Authority opened a separate inquiry into Apple and Google’s mobile ecosystems in January 2025; the two companies made commitments to the CMA in February 2026 to change app store processes and improve interoperability.

Hours before the FCA’s disclosure, a consortium including Ondo Finance, JPMorgan’s Kinexys infrastructure, Mastercard and Ripple completed a pilot described by participants as a near-real-time, cross-border redemption of a tokenized short-term U.S. government treasury fund. According to participants, Ripple redeemed part of its holdings in Ondo’s Short-Term U.S. Government Treasuries fund (OUSG), which is represented on the XRP Ledger. Mastercard’s Multi-Token Network triggered the associated dollar payment. JPMorgan’s Kinexys then moved the funds through its correspondent banking network to settle U.S. dollar proceeds into Ripple’s bank account in Singapore.

The settlement of U.S. dollars used traditional banking rails, so fiat funds moved through correspondent banking before reaching Ripple’s account. Ian De Bode, president of Ondo Finance, described the event as “the first time tokenized U.S. Treasuries have settled across borders and banks in near real time and outside traditional banking windows.”

Institutional interest in tokenized real-world assets is growing, though the market remains limited in size. The total value of tokenized real-world assets, excluding stablecoins, is about $31 billion globally. The Depository Trust and Clearing Corporation plans to launch a tokenization service in October with permission to tokenize Treasury bills and bonds. Nasdaq has said it is pursuing tokenized trading for stocks and exchange-traded funds.

Regulatory clarity for tokenized assets is unresolved in the U.S. The CLARITY Act, a bill that aims to define which federal agencies oversee parts of the crypto market, passed the House and is awaiting Senate action. U.K. authorities are examining payment arrangements for potential competition concerns while financial firms and banks are testing tokenized settlement mechanisms that combine blockchain records with traditional banking infrastructure.