Visa unveils blockchain platform for banks to handle fiat-backed tokens

Visa has announced a new platform that will help banks issue and manage fiat-backed tokens on blockchain networks, and BBVA will begin piloting the platform by 2025.

Global payment network Visa has announced a blockchain-based platform that aims to help financial institutions integrate fiat-backed tokens and bridge the gap between traditional banking and blockchain technology.

Called the Visa Tokenized Asset Platform, the platform will allow financial institutions to mint, burn and transfer tokens backed by Spanish multinational banking giant BBVA and fiat currencies such as stablecoins, Visa said in a press release on Oct. 3. Piloting the technology on the public Ethereum (ETH) blockchain in 2025.

Visa says its VTAP solution integrates with existing banking infrastructure via APIs and allows banks to explore tokenization use cases in a sandbox environment. The platform’s programmability also allows financial institutions to automate processes such as “managing complex credit lines using smart contracts and using fiat-backed tokens to release payments when payment terms are met.”

“We are excited to use our experience in tokenization to help banks integrate blockchain technologies into their operations.”

Vanessa Colella, Visa’s global head of innovation and digital partnerships

According to the press release, BBVA is testing the platform through 2024, focusing on token issuance, transfer and redemption on testnet blockchains. However, it is unclear exactly when the Spanish giant plans to pilot the platform. Visa says its platform is designed to support interoperability between multiple blockchain networks, but it’s unclear if other networks are eligible for support.

Visa raises concerns over stablecoin adoption

Earlier in May, Visa unveiled a study that challenges the assumption that stablecoin transactions are approaching the volumes seen on traditional payment networks. Cuy Sheffield, Visa’s head of crypto, noted that a significant portion of stablecoin activity is driven by automated bot transactions rather than actual usage.

But the findings sparked controversy, with some industry participants questioning Visa’s methodology. While Visa remains cautious about the adoption of stablecoins, others argue that stablecoins are still in their infancy and should not be ignored based on available data.