Digital payments giant Visa announced its bold step into the asset tokenization market in 2024 with the introduction of the Visa Tokenized Asset Platform (VTAP). This product is designed to help banks and financial institutions issue and manage fiat-backed tokens on blockchain networks. Visa’s entry into the tokenization sector indicates a major shift in financial infrastructure, with significant implications for global markets and investment trends.
Visa Tokenized Asset Platform explained
VTAP is a business-to-business (B2B) product aimed at enabling financial institutions to bring fiat currencies onto blockchain networks. It offers a seamless way for banks to experiment with fiat-backed tokens, such as stablecoins or tokenized deposits, in a secure and controlled environment.
The platform operates through the Visa Developer Platform, providing participating banks or clients with APIs to mint, transfer, and redeem fiat-backed tokens. With minimal technical integration required, VTAP makes it easier for banks to explore the applications of blockchain technology while maintaining their existing financial infrastructure.
Courtesy of its smart contract compatibility, the solution can enable banks to automate complex financial processes. For instance, banks can use smart contracts to automate loan disbursements and repayments, settle trades in tokenized commodities or assets instantly, and also implement programmable payment systems based on predefined conditions.
VTAP is designed to work across multiple blockchain networks, including public blockchains like Ethereum and permissioned networks used by enterprises. This interoperability ensures that banks can interact seamlessly with various blockchain ecosystems, enhancing their reach and capabilities.
Moreover, VTAP offers a test environment where financial institutions can experiment with issuing, transferring, and redeeming fiat-backed tokens. This allows banks to explore use cases and refine their blockchain strategies before rolling out live services to customers.
Read also: Asset Tokenization as a Use Case of Blockchain Technology
BBVA taps VTAP to launch initial live pilot in 2025
One of the first institutions to partner with Visa on VTAP is BBVA, a multinational bank headquartered in Spain. Per the announcement, BBVA has been actively testing the VTAP sandbox core functionalities throughout 2024, including issuance, transfer, and redemption of a bank token on a testnet blockchain.
In a move that could set a precedent for other financial institutions, BBVA plans to launch an initial live pilot of a fiat-backed token using VTAP in 2025. Targeting select customers, the pilot program would be launched on Ethereum.
Francisco Maroto, Head of Blockchain and Digital Assets at BBVA, expressed optimism about the collaboration with Visa, stating: “We are proud to continue spearheading the exploration of tokenized solutions with Visa through its VTAP platform. “This collaboration marks a significant milestone in our exploration of the potential of blockchain technology and will ultimately help enable us to broaden our banking services and expand the market with new financial solutions.”
Read also: Visa and Coinbase partner to enable users purchase crypto and withdraw funds to bank account
Asset tokenization market potential
As of 7 January 2025, Real World Assets (RWAs) boasted a market capitalization of $19.9 billion while RWA protocols boasted a market cap of $4.8 billion, according to Coingecko data. On the other hand, Tokenized Real Estate’s market valuation stood at roughly $365 million at the time of writing.
Visa’s latest investment in this sector through VTAP hints at the immense potential of the tokenization market. Describing Visa’s strategic move as $1.4 quadrillion bet on tokenization, Catalyst co-founder Will Leatherman estimates the potential tokenization market size to reach $1.4 quadrillion across various asset classes as follows: Currency ($7 trillion), government bonds ($277 trillion), stock market ($89.5 trillion), real estate ($280.6 trillion) and derivatives ($6,667.1 trillion).
“Companies that embrace token-based infrastructure in the next 24 months will capture massive market share. Those who wait will play catch-up,” Leatherman said. Citing that the financial rails are changing, he predicts that 90% of Central Bank Digital Currencies (CBDCs) will be EVM compatible.
Read also: Brazil’s Central Bank tests DeFi features in its CBDC pilot.
Notably, Visa is not the only player betting on tokenization. Leading firms like BlackRock and Securitize are already making moves in this space, underscoring its potential as the next frontier in financial technology.
BlackRock, the asset management giant has been vocal about its interest in blockchain technology and tokenized assets. With over $10 trillion in assets under management (AUM), the bitcoin ETF issuer has hinted at using tokenization to democratize access to traditionally illiquid assets. In March 2024, BlackRock launched its first tokenized fund, BUIDL, on the Ethereum Network.
Also, blockchain-based platform specializing in tokenized securities Securitize, has made strides in the sectot by enabling the issuance of tokenized stocks, bonds, and other financial instruments. The firm aims to bridge traditional finance with blockchain by offering secure and compliant tokenized solutions. In April 2024, Securitize completed a $47 million funding round led by BlackRock.
Read also: Ethena launches new stablecoin backed by BlackRock’s BUIDL
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