BBVA plans to partner with Visa to introduce a stablecoin, which is currently in the sandbox development stage. The bank is evaluating potential backing options for the stablecoin, including deposits, money market funds, and fiat currencies. BBVA aims to apply for settlement on tokenized asset exchanges and build a stablecoin centered on the euro.
BBVA, Spain’s second largest financial institution, plans to soon enter the rapidly growing stablecoin market by 2025. The financial giant is working with Visa on the Visa program’s sandbox, which aims to help companies issue tokenized assets. Francisco Maroto, head of digital assets and blockchain at BBVA, shared insight into the bank’s ambitions in a recent interview.
BBVA’s search for asset backing
BBVA has been working on digital assets since 2014, and this promising stablecoin is seen as a natural next step to reassure regulators about the changing financial landscape. According to Maroto, blockchain will be a disruptive technology for new creation and expression of digital value, and for the financial system as a whole.
However, the details of what and how the stablecoin will be collateralized have not yet been decided. Maroto looked at several options, including deposits, money market funds, and even fiat currencies such as the euro or US dollar.
The stablecoin space is becoming increasingly competitive with the entry of various traditional financial players. For example, PayPal launched the PYUSD stablecoin in 2023, which only highlighted the growth of this sector.
Here, cooperation with Visa has become strategic for BBVA. Because BBVA is leveraging Visa’s established reputation and its regulatory compliance to build a stablecoin that fits well into the European regulatory framework.
Visa’s new products for financial institutions
Visa’s latest announcement introduces a product that allows financial institutions to create fiat-backed tokens. This means that banks determine their asset reserves in a range between fiat currency and deposits.
For now, these tokens work within specific banking chains, but the long-term goal is interoperability within different financial institutions. BBVA’s new stablecoin will likely be denominated in euros and will be able to be settled on exchanges that handle tokenized assets. The bank sees itself operating the Mintburn mechanism that converts fiat currencies into the cryptocurrency ecosystem.
However, despite these ambitious plans, the US market is not currently included in the plans. The company currently provides Bitcoin, Ethereum and USDC storage and trading services to private banking and institutional clients in Switzerland, while also starting operations in Turkey.
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