Visa Launches Tokenized Asset Platform for Banks to Issue Fiat-Backed Tokens on Ethereum

Payments giant Visa (V) has unveiled its Visa Tokenized Asset Platform (VTAP), designed to assist banks in issuing and testing fiat-backed tokens on the Ethereum network. This innovative platform aims to digitize and automate existing processes, facilitating the exchange of real-world assets (RWAs) through the power of smart contracts.

Banks will utilize VTAP to purchase tokenized RWAs, such as commodities or bonds, with near-real-time settlement capabilities. Spanish bank BBVA will be among the first financial institutions to pilot the platform, with plans for a live rollout in 2025.

“We think that creates a significant opportunity for banks to issue their own fiat-backed tokens on blockchains, do it in a regulated way and enable their customers to access and participate in these on-chain capital markets,” Cuy Sheffield, Visa’s crypto head, stated.

Visa's involvement in blockchain technology is well established, having processed cryptocurrency payments in stablecoin USDC on Ethereum since March 2021.

The platform not only focuses on token issuance, transfer, and redemption but also addresses various use cases, including real-time money movement between bank clients, interbank transfers using wholesale central bank digital currencies (CBDCs), and cross-border transfers for multinational corporations.

Catherine Gu, Visa’s head of CBDC and tokenized assets, highlighted that current financial systems limit multinational corporations' ability to move money 24/7, an issue VTAP seeks to resolve.

Visa has also been active in CBDC pilots, collaborating with central banks in Brazil and Hong Kong. In Brazil, Visa participates in the Drex pilot alongside XP, one of the country’s largest independent brokers. These experiences have spurred increased interest from commercial banks in tokenized assets.

Visa aims to create global standards for interoperability among financial institutions exploring blockchain technology, addressing the fragmentation in tokenization and smart contract approaches.

In a parallel development, global payments infrastructure provider Swift recently announced a platform designed to enhance the use of RWAs. Unlike Visa's focus on tokenizing assets, Swift’s platform aims to foster interoperability between various nations' CBDCs and RWAs through a Delivery-versus-Payment (DvP) and Payment-versus-Payment (PvP) model.

As the financial landscape evolves with the integration of blockchain technology, Visa’s VTAP stands at the forefront, paving the way for banks to leverage digital currencies and enhance their operational capabilities.