Payments giant Visa may have come out with its latest innovation, a new product that banks may use to issue fiat-backed tokens on the Ethereum blockchain. According to a recent announcement shared by CoinDesk on Wednesday, the Visa Tokenized Asset Platform (VTAP) will allow financial institutions to develop tokenized assets that are backed by fiat currency. These tokens will be powered by smart contracts to streamline and automate processes in such a way that exchanging (trading and settling) real-world assets (RWAs), such as commodities and bonds, will now take a new shape.
Visa Tokenized Asset Platform to Revolutionize RWA
As mentioned earlier, Visa’s VTAP will allow banks to purchase tokenized RWAs with near-real-time settlement. This does not only improve efficiency, but also ensures that there are no delays in financial transactions.
Interestingly, the VTAP platform appears to have launched on a very high note, capturing the attention of the likes of Spanish banking giant BBVA.
Although BBVA is now one of the early adopters, many more financial institutions are expected to follow in its footsteps by adopting the platform as well.
As per BBVA, it plans to roll out a live pilot by next year.
A Step Forward in the Tokenization of Real-World Assets
It might be worth noting that Visa’s recent announcement is not its first move into blockchain and digital assets. As far back as March 2021, the company processed crypto payments in USDC on the Ethereum network.
Earlier this month, Visa partnered with the Central Bank of Brazil towards introducing the country’s central bank digital currency (CBDC).
While its past record speaks for itself, Visa’s latest move reflects the company’s commitment to the future of decentralized finance (DeFi).
With fiat-backed tokens on Ethereum, the platform will allow banks to digitize traditional financial processes. Therefore, ultimately leading to faster and more transparent transactions.
For clarity, tokenized RWAs may include a wide range of assets. That is, from commodities like oil and gold to financial instruments like bonds. However, with the VTAP platform just launched and its potential to increase liquidity and reduce settlement times, markets that have traditionally been slow-moving now have something to cheer about, thanks to Visa’s innovation.
