Visa has released a product to help financial institutions issue fiat-backed tokens on blockchain networks.
The Visa Tokenized Asset Platform (VTAP), the company announced Thursday (Oct. 3), is available on Visa’s development platform to allow its banking partners “to create and experiment with their own fiat-backed tokens in a VTAP sandbox.”
The effort, Visa said in a news release provided to PYMNTS, will employ the company’s expertise in technologies like smart contracts to let banks issue and transfer fiat-backed tokens over blockchain networks.
“Visa has been at the forefront of digital payments for nearly sixty years, and with the introduction of VTAP, we are once again setting the pace for the industry,” Vanessa Colella, Visa’s global head of innovation and digital partnerships, said in the release.
“We’re excited to leverage our experience with tokenization to help banks integrate blockchain technologies into their operations.”
According to the release, Spanish bank BBVA has already been testing VTAP sandbox functionalities this year, including the issuance, transfer and redemption of a bank token on a testnet blockchain, along with interactions of the token with smart contracts.
The bank aims to launch an initial live pilot with select customers on the public Ethereum blockchain next year, Visa added. The benefits of VTAP include its ease of integration, programmability and interoperability, the release notes.
“There is a growing ecosystem where tokenized real-world assets are being issued across multiple permissioned and public blockchain networks,” the company said. “Visa’s vision is to enable interoperability across different blockchains for banks utilizing the VTAP platform.”
With an API connection to VTAP, in the future, banks can allow multiple use cases and interact with partners and clients on permissioned and public blockchains.
“To support the broad ecosystem adoption of tokenized assets, Visa is committed to enabling safe and secure cross-chain exchanges of tokenized real world assets using fiat-backed tokens,” the release added.
PYMNTS examined the role blockchain technology plays in cross-border payments in a recent conversation with Sheraz Shere, general manager of payments and commerce at Solana Foundation.
“Blockchain solutions and stablecoins, I don’t like to use the term crypto because this is more about FinTech, they’ve found product-market-fit in cross-border payments,” Shere said.
He added that one of the most notable benefits of blockchain technology is disintermediation — doing away with the need for the multiple hops through correspondent banks, which typically make transactions slower and more costly.
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