- Visa has introduced the Visa Tokenized Asset Platform (VTAP), enabling banks to issue fiat-backed tokens on the Ethereum blockchain using smart contracts.
- VTAP aims to digitise and automate the trading of real-world assets, such as commodities and bonds, providing a bridge between traditional banking and blockchain technology.
- The Spanish bank BBVA is expected to pilot VTAP, with plans for a live rollout in 2025.
Payment processor Visa has just launched the Visa Tokenized Asset Platform (VTAP), a solution that allows banks to issue fiat-backed tokens on the Ethereum blockchain, according to a report from Blockworks.
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VTAP will create these tokens using Ethereum’s smart contracts, aiming to digitise and automate traditional processes for trading real-world assets (RWAs), including commodities and bonds.
Overall, this move will provide a bridge between traditional banking and blockchain technology, allowing institutions to explore blockchain use cases while still working in a regulated environment. Some of the benefits for institutions include:
- Real-time money movement between bank clients.
- Interbank transfers in markets with wholesale CBDCs.
- And cross-border transfer for multinational corporations.
Also, it seems that the Spanish bank BBVA will pilot the platform, which is expected to roll out in 2025.
Tokenisation on the Works
As mentioned, VTAP will allow banks to handle tokenised versions of assets to enable real-time settlements using tokens.
Visa’s history with blockchain technology traces back to the initial boom of decentralised finance (DeFi). The payment processor started executing on-chain transactions using Circle’s USDT stablecoin on the Ethereum network back in 2021.
Visa’s reach also extends to central bank digital currency (CBDC), as the firm has participated in CBDC pilots, including projects with Hong Kong’s central bank. It has also collaborated with Brazil’s central bank on a pilot project for Drex, the nation’s digital Brazilian real.
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The Rise of Tokenisation
The tokenisation market has become an attractive field for traditional institutions. This is where blockchain technology shines the most. This is because tokenisation converts tangible and intangible assets, like real estate and government bonds, into tokens tradable on a blockchain network, opening multiple windows of opportunity for all parties involved.
Tokenised US treasuries are arguably the flagship product of tokenisation. This particular sector soared 164% by late August, surpassing US$2B (AU$2.92B), led by, of course, BlackRock, the asset manager giant with trillions of US dollars under management.
Ethereum is not the only network that institutions are considering exploring for tokenisation purposes. As Crypto News Australia reported, Franklin Templeton and Citigroup announced their intentions to leverage Solana’s blockchain for their upcoming financial services.
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