, allowing banks to issue and manage fiat-backed tokens on blockchain, paving the way for blockchain-financial integration.){kind=link}
Visa, the global payments technology company, on the 3rd of October, announced the launch of its Visa Tokenized Asset Platform (VTAP). This innovative solution aims to bridge the gap between traditional fiat currencies and blockchain technology, potentially revolutionizing how financial institutions interact with digital assets.
By enabling banks to issue and manage fiat-backed tokens on blockchain networks, VTAP represents a bold step towards integrating cutting-edge blockchain capabilities with the established financial system.
Visa Launches Groundbreaking Tokenized Asset Platform
Visa, the global digital payments giant, in a recent publication unveiled a groundbreaking new product called the Visa Tokenized Asset Platform (VTAP). This innovative solution is designed to help financial institutions issue and manage fiat-backed tokens on blockchain networks, effectively bridging the gap between traditional currencies and blockchain technology.
The VTAP solution is now available on the Visa Developer Platform, allowing participating financial institution partners to create and experiment with their own fiat-backed tokens in a sandbox environment. This move demonstrates Visa’s commitment to staying at the forefront of digital payment technologies and leveraging its extensive experience with tokenization to assist banks in integrating blockchain technologies into their operations.
One of the key benefits of VTAP is its ease of integration. The platform provides banks with the tools to mint, burn, and transfer fiat-backed tokens, such as tokenized deposits and stablecoins. It also allows them to experiment with various use cases in a test environment.
Visa plans to support live programs in 2025, once participating banks are ready to launch with end customers. The integration process is designed to be minimal, with banks able to access the full suite of VTAP services through APIs that enhance existing financial infrastructure.
Another significant advantage of VTAP is its programmability. The platform is designed to enable banks to use their fiat-backed tokens within smart contracts. This feature could potentially revolutionize existing workflows by digitizing and automating them, as well as facilitating the exchange of new types of real-world assets.
For example, banks could use smart contracts to automate complex credit line administration or enable customers to purchase tokenized commodities or treasuries with near real-time settlement on the blockchain.
Interoperability is a crucial aspect of VTAP’s design. As tokenized real-world assets are increasingly being issued across multiple blockchain networks, both permissioned and public, Visa aims to enable interoperability across these different blockchains for banks using the VTAP platform.
In the future, a single API connection to VTAP could allow banks to enable multiple use cases and interact with partners and clients across various blockchain networks.
BBVA, a major financial institution, has already been working in the VTAP sandbox throughout the year. They have been testing core functionalities including the issuance, transfer, and redemption of a bank token on a testnet blockchain, as well as interactions of the token with smart contracts.
BBVA aims to launch an initial live pilot with select customers in 2025 on the public Ethereum blockchain, marking a significant step forward in the exploration of blockchain technology’s potential in banking services.
Visa’s introduction of VTAP represents a major development in the integration of traditional finance with blockchain technology. By leveraging its global network of over 15,000 financial institutions and its expertise in facilitating transactions across more than 200 countries and territories, Visa is positioning itself as a key player in the future of digital finance.
The company’s commitment to developing standards and capabilities for these new payment flows in a secure, reliable, and compliant manner underscores the potential impact of VTAP on the financial industry as a whole.
Industry Advances in Asset Tokenization
In a parallel development highlighting the growing trend of asset tokenization, Digital Asset has successfully collaborated with industry leaders to tokenize gold, gilts, and Eurobonds. This initiative brings together key players in the financial sector, including Euroclear, The World Gold Council, and global law firm Clifford Chance, demonstrating the widespread interest and potential in tokenizing traditional assets.
The tokenization of gold, in particular, has seen a surge in demand. This trend aligns with the continued growth and popularity of gold as a traded asset. In 2023, the average daily trading volume for gold reached an impressive $162 billion worldwide, underscoring the metal’s enduring appeal and the potential benefits of its tokenization.
Sovereign Gilts and Eurobonds represent another significant area for tokenization, offering a deep pool of high-quality liquid assets. As of mid-2023, the total market of Gilts in the UK amounted to nearly GBP 2.4 trillion, highlighting the substantial scale of this asset class. Additionally, the outstanding Eurobond issuance exceeded EUR 12.97 trillion, further emphasizing the vast potential for tokenization in these markets.
These developments in asset tokenization, occurring alongside Visa’s introduction of VTAP, indicate a broader shift in the financial industry towards embracing blockchain technology and digital representations of traditional assets.
The successful tokenization of such significant asset classes suggests a future where digital and traditional finance are increasingly integrated, potentially offering new levels of efficiency, liquidity, and accessibility in global financial markets.