Visa debuts VTAP to help banks issue fiat-backed tokens on Ethereum

Payments services giant Visa has launched the Visa Tokenized Asset Platform (VTAP), a b2b solution for commercial banks to issue fiat-backed tokens on the Ethereum network. In an announcement on October 3, the company said the product will help banks bridge fiat currencies with blockchain networks.

The official announcement comes a few days after several Visa executives initially disclosed that the product was on the way and that some commercial banks had already signed up to try it out. It noted that introducing VTAP is an advancement in its capabilities as a digital payments provider.

Visa said:

“Visa is applying its expertise in new technologies, such as smart contracts, to enable banks to issue and transfer fiat-backed tokens over blockchain networks.”

Meanwhile, Visa’s Global Head of Innovation and Digital Partnership, Vanessa Colella, described VTAP as another way the company is setting the pace for the digital payment industry, adding that it already has tokenization experience and will now help banks integrate this innovation into their operations.

Banks are already integrating Visa’s VTAP

Although the solution is still in its experimental stage on the Visa Developer Platform, some banks appear to be planning to integrate it into their operations. Visa disclosed that major Spanish bank Bilbao Vizcaya Argentaria (BBVA) is already testing the core functionalities of the VTAP and will launch a live pilot in 2025 for select customers.

According to BBVA’s Head of Blockchain and Digital Assets, Francisco Maroto, the collaboration with Visa allows it to explore tokenized solutions and the use of blockchain technology in the banking sector.

He said:

“This collaboration marks a significant milestone in our exploration of the potential of blockchain technology and will ultimately help enable us to broaden our banking services and expand the market with new financial solutions.”

Meanwhile, Visa also outlined some of the platform’s benefits, noting that it can be easily integrated by any bank, is programmable, and is interoperable with multiple blockchains. Even at its current stage, banks can already use it to mint, issue, transfer, and burn fiat-backed tokens such as stablecoins, central bank digital currencies (CBDCs), and tokenized deposits.

However, the potential use cases could see it become a tool for trading tokenized real-world assets (RWAs) and commodities, automating settlements of transactions on-chain almost in real-time, and enabling interbank money movements and cross-border transfers.

Traditional payment giants focus on blockchain and crypto

Visa’s VTAP continues the company’s record of integrating and experimenting with blockchain technologies to improve its operations. The firm, a key participant in at least two CBDC pilots, has been testing blockchain solutions for a while now, similar to its rival, MasterCard.

A few days ago, Mastercard launched a non-custodial Bitcoin debit card through a partnership with Web3 infrastructure firm Mercuryo, allowing holders to pay directly with BTC. The Web3 card is still in its pilot phase and is available only in Europe. It highlights how the company has been integrating blockchain technologies.

Meanwhile, most TradFi firms appear to be interested in tokenization and interoperability. Aside from Visa, a message infrastructure provider for banks, Swift has also been experimenting with solutions that will enable tokenized assets for banks and create a unified rail for transactions between traditional financial institutions and blockchain protocols.

It recently announced that banks across Asia, Europe, and North America would be able to execute digital currency and asset transactions on its platform. Although this is expected to be a pilot phase, it represents a massive effort to streamline the rails connecting TradFi to the blockchain, enabling secure and regulated access for institutional investors.