Visa’s Tokenized Asset Platform (VTAP): Everything We Know

Payments giant Visa is working with banks around the world to help them issue fiat-backed tokens on blockchain networks.

The project, dubbed the Visa Tokenized Asset Platform (VTAP), enables institutions to develop and test digital assets like stablecoins and Central Bank Digital Currencies (CBDCs).

It follows a dramatic rise in the tokenization of real-world assets (RWA), which has seen more than $13 billion of assets move on-chain as of November 2024. As we explore further down, it is being called “the third revolution in asset management.”

According to data from rwa.xyz, the tokenized U.S. Treasury market alone has reached over $2.5 billion in value.

This leads to Visa’s grand plan: allow banks to build global fiat-backed stablecoins to allow easy access to tokenized commodities and treasuries with instant (or near-instant) settlement.

Let’s explore Visa’s VTAP initiative and its impact on the tokenization market in detail.

Table of Contents Table of Contents

1. Key Takeaways
2. What Is Visa's VTAP?
3. How Does VTAP Work?
4. RWA Tokenization Set for 50x Expansion by 2030
5. The Bottom Line
6. FAQs
7. References

Show Full Guide

Table of Contents

1. Key Takeaways
2. What Is Visa's VTAP?
3. How Does VTAP Work?
Show Full Guide
4. RWA Tokenization Set for 50x Expansion by 2030
5. The Bottom Line
6. FAQs
7. References

What Is Visa’s VTAP?

In early October, Visa announced VTAP as a “product designed to help financial institutions issue and manage fiat-backed tokens on blockchain networks.”

The firm disclosed that the new solution is available on the Visa Developer Platform, allowing financial institutions to create and experiment with their own fiat-backed tokens using a sandbox environment.

Fiat-backed tokens are digital assets tied to traditional currencies like the U.S. dollar or euro. A “sandbox” is a secure testing environment where financial institutions can try out new ideas and technologies without impacting real-world systems or assets.

VTAP offers a number of benefits compared to traditional payment methods. By using blockchain technology and smart contracts, Visa enables banks to issue and transfer fiat-backed tokens quickly and securely.

“Visa has a global network of more than 15,000 financial institutions and helps facilitate seamless transactions of fiat currencies across more than 200 countries and territories,” Visa wrote in the announcement.

“Now, Visa is applying its expertise in new technologies, such as smart contracts, to enable banks to issue and transfer fiat-backed tokens over blockchain networks.”

Visa revealed that Spanish bank BBVA is testing the VTAP solution within a sandbox environment, exploring potential applications like issuance, transfer, and redemption, as well as interactions of the token with smart contracts.

How Does VTAP Work?

The main task of VTAP is to make testing and integrating fiat-backed tokens on the blockchain easier. To do this, it offers a managed sandbox environment, providing clients with the tools and support needed to prepare for real-world use without extensive technical expertise or resources.

In the sandbox phase, Visa manages the underlying blockchain infrastructure, enabling clients to create, manage, and exchange fiat-backed tokens seamlessly.

“As VTAP moves to real-value phases, Visa expects to collaborate with Clients, taking into account Client requirements, applicable laws and regulations, and industry best practices,” Visa said in a blog post.

Access to VTAP is currently limited for approved clients. However, the approved clients receive access to VTAP’s APIs, along with integration guides, testing tools, and supplementary materials to help them navigate the sandbox effectively and prepare for the launch.

VTAP is essentially a gateway for businesses to explore blockchain technology with minimal risk and resources.

RWA Tokenization Set for 50x Expansion by 2030

Visa’s growing interest in the tokenization market comes as the industry is poised for significant ground. According to a Tren Finance report, the RWA tokenization market is set for a 50-fold expansion by 2030.

The report noted that major financial institutions and consulting firms suggest the sector could achieve a market valuation ranging from $4 trillion to as much as $30 trillion. If the market hits the median estimate of approximately $10 trillion, it would mark a 54-fold increase from its current valuation.

“The integration of traditional finance with blockchain technology is not just a trend, but a fundamental shift towards a more accessible, efficient, and dynamic financial ecosystem,” the report said.

In an October 29 report, global consulting firm Boston Consulting Group (BCG) labeled RWA tokenization as “the third revolution in asset management.”

The firm projected that tokenized assets could make up 1% of all global mutual funds and exchange-traded funds (ETFs) within seven years.

“We see a pattern of growing investor demand in the tokenized funds space,” said David Chan, Managing Director and Partner at BCG.

Take, for example, BlackRock, the world’s largest asset manager, which launched its tokenized money market fund, BUIDL, in March.

The Bottom Line

Visa’s VTAP offers financial institutions an accessible platform to experiment with fiat-backed tokens like stablecoins and CBDCs and explore blockchain technology with minimal risk and resources.

The platform comes amid the growing interest in tokenized assets, with projections estimating a potential market size of up to $30 trillion by 2030.

With BCG seeing RWA as “the third revolution”, it is no surprise to see giants like Visa playing in the arena.

FAQs