VTAP Explained: What is Visa Tokenized Asset Platform?

What is VTAP by Visa?

Visa unveiled its Visa Tokenized Asset Platform (VTAP) on Oct. 3; this initiative aims to simplify the issuance and management of tokenized assets, including tokenized deposits, stablecoins, and central bank digital currencies (CBDCs).

With VTAP, financial institutions can create and experiment with their own fiat-backed tokens using a sandbox environment accessible through the Visa Developer Platform. 

Think of fiat-backed tokens as digital assets pegged to traditional currencies like the United States dollar or euro. A sandbox is a secure, controlled environment that allows financial institutions to test and experiment with new ideas and technologies without the risk of affecting real-world operations or assets.

With a vast network of over 15,000 financial institutions spanning more than 200 countries and territories, Visa hopes to enhance the transaction experience for fiat currencies.

Why does VTAP matter? When you consider VTAP vs. traditional payments, the advantages become evident. By utilizing advanced technologies such as smart contracts, Visa is enabling banks to issue and transfer fiat-backed tokens on blockchain networks. 

Moreover, with increased security and speed, VTAP introduces a level of adaptability that conventional systems may lack. Also, the VTAP crypto integration establishes Visa’s role in the changing cryptocurrency landscape, focusing on connecting fiat currencies with blockchain technology. 

Notably, BBVA, a Spanish bank, has been actively testing the VTAP solution within a sandbox environment this year, exploring its potential applications and benefits.

Did you know? BBVA, hailing from Spain, was at the forefront of blockchain innovation in 2018 and 2019, running award-winning pilots for issuing bonds using blockchain technology. Furthermore, it became one of the initial banks to offer cryptocurrency services to retail customers, specifically in the regulation-friendly landscape of Switzerland.

How does VTAP work?

VTAP facilitates the testing and integration of fiat-backed tokens on the blockchain through a managed sandbox environment, ensuring clients have the tools and support to prepare for commercial implementation.

• Sandbox features: The VTAP platform enables clients to create, manage, and exchange fiat-backed tokens on the blockchain. In the initial sandbox phase, Visa manages the underlying blockchain infrastructure, allowing clients to explore this technology without extensive resources or expertise.
• Testing phase: The VTAP’s availability is currently limited. Still, using the VTAP sandbox environment, clients can experiment with various use cases and assess the value of tokenized assets as they prepare for commercial launch. 
• Onboarding process: Once approved, clients gain access to the VTAP APIs, supplementary materials, integration specifications and testing tools to help them navigate the sandbox environment.

Did you know? If clients have questions or need further clarification about the VTAP platform, they are encouraged to connect with their Visa account executives. These representatives can provide personalized support, assist with onboarding and offer guidance on making the most of the VTAP services. 

Key features of VTAP

VTAP offers a suite of features that simplify the creation and management of fiat-backed tokens, providing banks with secure integrations, programmability and a supportive blockchain environment.

Let’s understand these features in more detail:

• Programmability: Empowers clients to automate existing processes and introduce new programmable features using smart contracts, controlling permissions for their fiat-backed tokens.
• API integration: Facilitates secure minting, burning and transferring of fiat-backed tokens through a unified set of APIs, streamlining access for banks.
• Blockchain framework: Employs a permissioned EVM-compatible blockchain for initial use case testing, ensuring clients can familiarize themselves with crucial functionalities paving the way for future interoperability.

Integrated custody solutions: Provides a built-in custody service to manage private keys, allowing clients to create and operate wallets for testing purposes without using their own wallet infrastructure.

Benefits of VTAP

Visa’s VTAP offers banks a secure and efficient way to integrate fiat currencies into blockchain networks, enabling seamless transactions and innovative financial solutions.

Here are the key advantages of VTAP:

• Seamless integration: With VTAP, Visa offers a seamless platform for financial institutions to issue and manage fiat-backed tokens. Banks can mint, burn and transfer assets like tokenized deposits and stablecoins while experimenting with various use cases. They can also safely explore possibilities before going live by testing solutions using the sandbox environment.
• Simplified technical integration: With minimal technical integration, participating banks can access a comprehensive suite of VTAP services via APIs, enhancing their existing infrastructure and ensuring efficient operations.
• Unlocking programmable potential: The platform allows banks to incorporate fiat-backed tokens into smart contracts, which can help digitize and streamline current processes, paving the way for exchanging new types of real-world assets. Additionally, customers might use these tokens to buy tokenized commodities or treasuries, benefiting from near-instant settlements on the blockchain.
• Bridging blockchains: The growing tokenized real-world assets (RWAs) ecosystem spans various permissioned and public blockchain networks. Visa aims to facilitate interoperability across them. For instance, banks using the VTAP platform could engage in multiple use cases and collaborate with partners and clients using either of these blockchain networks.

The payments landscape is evolving and expanding at scale; VTAP offers an innovative solution for modern digital transactions by leveraging tokenization and blockchain technology. It will be interesting to see how it shapes the future of secure digital payments and asset management.