Visa recently launched the Visa Tokenized Asset Platform (VTAP) to help banks issue fiat-backed tokens on blockchain networks. Using the platform, it is possible to mint, burn, and transfer fiat-backed tokens through financial institutions. Live pilots on the public Ethereum blockchain will happen in 2025 as BBVA tests VTAP.
Visa Introduces Fiat-Backed Token Platform for Banks
Visa’s new VTAP token bridges traditional banking and blockchain by allowing banks to issue and manage fiat-backed tokens. The tokens are backed using fiat currencies in order to maintain stability in blockchain-based financial transactions.
With easy integration using secure APIs, VTAP allows banks to connect their existing systems to blockchain networks with minimal technical effort. The participating banks have access to Visa’s sandbox environment, which allows them to experiment with minting and handling these tokens.
BBVA Leads Blockchain Testing with Visa VTAP Pilot
This is the first time a bank will test VTAP BBVA working within a sandbox to explore its functionalities. The bank has been experimenting with supplying, exchanging, and redeeming bank tokens on test net blockchains before a live pilot. The pilot will happen on the public Ethereum blockchain in 2025 and will be a critical step in blockchain adoption by the banking sector.
BBVA will use pilots to test VTAP capabilities with specific customers in a real-world setting. The bank is looking to improve its market reach and offer new financial solutions to its clients by leveraging Visa’s platform.
The bank partnership with Visa can pave the way for other banks to consider blockchain technology. If everything goes as planned this could set a precedent for other firms interested in incorporating blockchain into their operations.
Programmability and Interoperability: Simplifying Blockchain for Banks
VTAP’s programmability is one of its greatest strengths. It enables banks to deploy fiat-backed tokens inside smart contracts, among other uses. This capability can automate sophisticated financial workflows like managing lines of credit or tokenized real-world assets. Smart contracts automate processes more effectively, reducing the need for manual oversight and allowing banks to become more operationally efficient.
Additionally, VTAP can operate on top of varying permissioned and public blockchain networks and is interoperable. It enables banks to take part in a broader range of blockchain-based financial activities (including tokenization of real-world assets, including commodities and treasuries). Visa wants to operate seamlessly across disparate blockchain ecosystems, helping banks provide more services.
Besides, it provides safe cross-chain asset exchange to interchange tokenized assets over several blockchains, making it easy and secure for exchanging trades. The aim here is to have financial institutions be able to understand the intricacies of blockchain technology.
Visa VTAP’s Role in Blockchain and Financial Services Integration
Visa’s involvement in central bank digital currency (CBDC) pilots, indicates its adoption of blockchain in the financial services sector. The company has worked with the Central Bank of Brazil and the Hong Kong Monetary Authority to help develop CBDC solutions.
Visa is an emerging pioneer in blockchain-based fundamental financial systems, in addition to its established experience in securely handling payments and tokenization.
