Visa has decided to launch a new platform for banks to issue fiat-backed tokens such as stablecoins and tokenized deposits.
The move comes as more financial institutions and businesses are exploring how blockchain technology can enhance their operations. Dubbed the Visa Tokenized Asset Platform (VTAP), the platform is designed to allow banks to “mint, write, and transfer” these tokens. According to a statement from Visa, VTAP is in the testing phase at the time of writing and is expected to launch next year.
A stablecoin is a type of cryptocurrency that is typically pegged to traditional assets such as the US dollar or other currencies, and is used for transactions or as a stablecoin of more volatile digital currencies such as Bitcoin or Ether. Often used as a replacement.
BBVA test platform before launch
Spanish bank BBVA has been testing VTAP throughout the year and plans to offer a pilot program to some customers on the Ethereum blockchain sometime in 2024. Visa’s Global Head of Innovation and Digital Partnerships said the company’s years of experience in digital payments will also see it lead in this space. He said VTAP is an example of how Visa aims to integrate blockchain technology with established payments infrastructure.
Visa says fiat-backed tokens, including stablecoins, are seeing increasing adoption in the financial sector. PayPal has introduced its own stablecoin (PYUSD), and other companies such as Stripe are now allowing merchants to accept stablecoins as part of their online payment services.
Visa officials also revealed that the company plans to leverage its tokenization expertise to help banks incorporate blockchain technology into their operations.
In other developments for Visa, the company launched a stablecoin analysis website in April 2024 through a partnership with Allium Labs. Representatives from Visa’s cryptocurrency division shared insights in a blog post regarding the rationale behind publishing these analyses. The data presented highlighted that the stablecoin’s trading volume has surpassed PayPal’s and is approaching Visa’s trading levels.
