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Visa has developed a new platform to assist financial institutions in issuing fiat-backed tokens and testing their use in various scenarios. This initiative is part of Visa’s broader effort to establish global standards that facilitate interactions between financial entities.
As more real-world assets like real estate and securities move to blockchain technology, there’s a rising demand to incorporate different forms of cash for trading on these networks. Cuy Sheffield, Visa’s head of crypto, sees this as a significant opportunity for banks to issue fiat-backed tokens on blockchains in a regulated manner. This would allow customers to participate in on-chain capital markets. Visa has observed central banks exploring tokenization to modernize financial infrastructures, and its involvement in CBDC pilots in Hong Kong and Brazil underscores this trend.
Banco Bilbao Vizcaya Argentaria (BBVA), based in Spain, has been testing Visa’s Tokenized Asset Platform (VTAP) sandbox. BBVA aims to launch a pilot program in 2025 on the Ethereum blockchain, testing the issuance and transfer of bank tokens.
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Visa executives noted that the next wave of innovation may come from banks developing their own products for real-time transactions and cross-border transfers. While fintechs like PayPal and asset managers such as BlackRock and Franklin Templeton have made strides in blockchain and stablecoin technology, banks are just beginning to experiment with tokenization.
Visa aims to help overcome regulatory and technological fragmentation, possibly creating standards to ensure interoperability between financial institutions working with tokenized assets. These advancements could pave the way for banks to develop more liquidity and explore structured financial products using smart contracts.
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