In a significant move, Visa has launched the Visa Tokenized Asset Platform (VTAP), a groundbreaking solution that enables banks to issue fiat-backed tokens on the Ethereum blockchain using smart contracts. This innovative platform aims to digitize and automate the buying and selling of real-world assets (RWAs), such as commodities and bonds, bridging the gap between traditional banking and blockchain technology.

Streamlining Asset Trading and Settlement

VTAP is designed to facilitate the tokenization of RWAs, allowing banks to create digital representations of these assets on the Ethereum network. This process enables real-time settlements, reducing the need for intermediaries and increasing the efficiency of transactions. The platform also provides a secure and regulated environment for institutions to explore blockchain use cases.

Key Benefits for Institutions

The introduction of VTAP offers several benefits for institutions, including:

• Real-time money flow between bank customers
• Interbank transfers in markets with wholesale central bank digital currencies (CBDCs)
• Cross-border transfers for multinational companies

BBVA to Pilot VTAP

The Spanish bank BBVA is set to pilot VTAP, with plans for a live rollout in 2025. This partnership demonstrates the growing interest in blockchain technology among traditional financial institutions and highlights the potential for VTAP to transform the way assets are traded and settled.

Visa’s Blockchain Heritage

Visa’s foray into blockchain technology dates back to the early days of decentralized finance (DeFi). In 2021, the company began executing on-chain transactions using Circle’s USDT stablecoin on the Ethereum network. Visa has also participated in CBDC pilots, including initiatives with Hong Kong’s central bank and Brazil’s central bank.

The Rise of Tokenization

The tokenization market has gained significant traction among traditional institutions, with blockchain technology playing a key role in this trend. Tokenization converts tangible and intangible assets, such as real estate and government bonds, into tokens tradable on a blockchain network, opening up new opportunities for all parties involved.

Tokenized US Treasuries Soar

Tokenized US treasuries have emerged as a flagship product in the tokenization market, with the sector growing 164% by late August to surpass US$2B (AU$2.92B). BlackRock, the asset management giant with trillions of US dollars under management, has been a key player in this space.

Ethereum and Beyond

While Ethereum is the chosen network for VTAP, other blockchain platforms are also being explored for tokenization capabilities. Franklin Templeton and Citigroup have announced plans to leverage Solana’s blockchain for their upcoming financial services, highlighting the growing interest in blockchain technology among traditional institutions.

Key Takeaways

• Visa’s VTAP enables banks to issue fiat-backed tokens on the Ethereum blockchain, streamlining asset trading and settlement.
• The platform provides a secure and regulated environment for institutions to explore blockchain use cases.
• BBVA will pilot VTAP, with a live rollout planned for 2025.
• Tokenization is gaining traction among traditional institutions, with blockchain technology playing a key role in this trend.
• Ethereum is not the only network being explored for tokenization capabilities, with other platforms like Solana also being considered.