According to an official press release, Visa has launched the Visa Tokenized Asset Platform (VTAP), with the goal of building a bridge between fiat currencies and blockchain to assist banks in issuing and managing fiat currency reserves based on Ethereum. Tokenize assets and promote settlement efficiency for cross-border payments.

Source: X/@VisaNews Visa announces transfer mechanism for tokenized platform

Why is Visa building a tokenization platform?

Visa's global network consists of more than 15,000 financial institutions, covering seamless transactions of legal currencies in more than 200 countries and regions; with such high market coverage, its tokenization platform VTAP is expected to gain global The widespread adoption within the country further enables Visa to maintain its leading position in the highly competitive cross-border payment field.

What features does VTAP have?

Thanks to Visa's highly flexible smart contract design, VTAP's main features include "easy integration", "programmability" and "interoperability".

Easy to integrate

Banks can mint, destroy and transmit tokenized assets through VTAP; because these tokenized assets are based on legal currency reserves, they also enjoy the bank's deposit interest rate. This feature is currently in sandbox testing, and Visa plans to launch it for banks that are ready in 2025. Participants can simply access the entire VTAP set through the API connection without the need for other technical development, which can further maximize the bank's Integration efficiency.

programmable applications

VTAP can help banks automatically manage tokenized legal currencies through smart contracts. For example, it can implement a complex credit limit process and make loans when the agreed payment terms are met; or it can support customers to use tokenized legal currency to purchase tokenized treasury bonds and commodities.

Can operate across chains

Due to the diversity of the blockchain ecosystem, various tokenized assets have been issued on multiple public chain networks, which has also resulted in a fragmented dilemma that makes it difficult to integrate their liquidity. In order to solve this problem, Visa plans to introduce cross-chain interoperability for VTAP in the future to support the payment systems of different banks through API connection, thereby achieving seamless circulation of tokenized assets.

Which banks currently use VTAP?

Visa has continued to conduct VTAP sandbox testing with Banco Bilbao Vizcaya Argentaria (BBVA) this year, including the issuance, transfer and redemption of tokenized fiat currencies through the Ethereum test network, as well as tokenized fiat currencies and smart phones. Interaction of contracts; this series of functions will be conducted as a preliminary live pilot (Live Pilot) with some customers on the Ethereum mainnet in 2025.

Francisco Maroto, Head of Blockchain and Digital Assets at BBVA said:

"VTAP will lead the development of tokenized solutions. The cooperation with Visa marks an important milestone in our exploration of blockchain technology and will enable our banking business to achieve market expansion through new financial technologies."

Visa VTAP compared to competitors

Coincidentally, Visa VTAP's strongest competitor, SWIFT, also announced on the same day that it will launch pilot transactions on tokenization technology in 2025, and they all made similar claims, that is, tokenizing assets such as legal tender or CBDC. cross-border payments. According to the information that has been released so far, the main differences between the two are the following two points:

Issuance of Tokenized Assets

Visa supports banks to mint, destroy and transmit tokenized fiat currencies through VTAP, and even automated treasury management (such as deposits or credit lines); while the SWIFT tokenization framework "distributed ledger PvP" focuses on existing The tokenized asset transfer does not support the minting, destruction or other applications of assets. This difference may make VTAP more flexible and customizable.

Visa - VTAP mechanismSource: LinkedIn/@Visa Visa VTAP settlement mechanism

Integration of cross-chain liquidity

During the VTAP sandbox testing period, Visa used the Ethereum testnet for the issuance, transfer and redemption of tokenized assets, and expects to use the Ethereum mainnet for pilots next year, although it expects to launch interoperable function, but it is still in the planning stage; on the other hand, SWIFT decentralized ledger PvP integrates the cross-chain interoperability protocol Chainlink CCIP in the underlying architecture, allowing assets to flow frictionlessly in different public or private chains, further Eliminates the dilemma of liquidity fragmentation.

SWIFT - PvP MechanismImage source: SWIFT.comSWIFT distributed ledger PvP settlement mechanism

Competition drives innovation in cross-border payments

In summary, Visa supports one-stop services for the issuance, transmission and redemption of tokenized assets, while SWIFT allows different blockchain networks between banks to use the same framework. Each has different advantages; this The difference also means that under the fierce competition from Visa and SWIFT, the cross-border payment field will likely usher in a new tokenization revolution next year.