Visa launches platform to help banks enter blockchain, providing banks with fiat-backed token integration

Visa has launched a new platform to assist financial institutions in issuing fiat-backed tokens, marking a significant step towards blockchain integration in banking.

The company’s crypto division, led by Cuy Sheffield, is guiding banks to modernise their systems by transitioning to blockchain-powered infrastructure, enabling participation in on-chain capital markets.

Visa’s Tokenized Asset Platform

The newly introduced Visa Tokenized Asset Platform (VTAP) provides banks with a regulated environment to explore blockchain technologies. Institutions such as Spain’s Banco Bilbao Vizcaya Argentaria (BBVA) are already testing the system, with plans to launch a pilot on Ethereum by 2025.

Similarly, Visa has been examining tokenized deposits for cross-border settlement in Hong Kong.

The platform signals that larger financial institutions, following the lead of fintech firms like PayPal, are prepared to adopt blockchain for stablecoin and fiat-backed token applications.

Real-Time Payments and Cross-Border Solutions

Visa identifies real-time transfers and cross-border payments as key use cases for fiat-backed tokens. Similar to JPMorgan's JPM Coin System, Visa's initiative will allow banks to use blockchain to facilitate seamless money transfers between clients.

This aims to unlock liquidity and accelerate money movement, helping banks navigate the complexities of regulatory compliance.

Catherine Gu, Visa’s head of CBDC and tokenized assets, emphasised the benefits for multinational corporations, noting the limited options for moving money around the clock.

Blockchain, she said, provides a faster and more efficient alternative, which is why major banks are eager to explore these possibilities.

Related reading：Visa Makes High-Profile Endorsement of Cryptocurrency and NFTs, Potentially Disrupting Global Crypto Compliance

Tokenized Assets and Smart Contracts

Visa foresees banks using fiat-backed tokens to interact with tokenized real-world assets, such as commodities or government securities, with blockchain enabling instant settlement.

Additionally, the platform could support smart contract applications, allowing banks to offer financial products like lending against tokenized assets.

While these opportunities are promising, Visa acknowledges challenges around platform fragmentation. Banks may choose to operate on different public and private blockchains, depending on their needs and regulatory requirements.

This lack of standardisation poses a hurdle to broad adoption, complicating interactions between institutions.

Visa’s Broader Blockchain Push

Visa continues to play a key role in the evolving relationship between blockchain and banking. Earlier this year, it partnered with Web3 infrastructure provider Transak, enhancing cryptocurrency adoption by enabling users to convert crypto to fiat directly through Visa debit cards.

This integration allows real-time crypto withdrawals via Visa Direct, with users able to spend crypto balances at over 130 million merchants globally.