In a move that could cater to crypto adoption, Visa has developed a new tokenization platform that could especially help banks issue tokens for real-world assets.
Global payments major Visa has been bullish on crypto use cases for a long time. Adding to its strategy on crypto, the firm has developed a new tokenization platform. Known as Visa Tokenized Asset Platform (VTAP), it will help banks issue tokens on Ethereum for real-world assets. These tokens will be backed by fiat currencies and will help make settlements seamless.
Moreover, aspects of blockchain technology, like smart contracts, will conceptually power these tokens. As a result, the exchange of real-world assets and other processes will see automation. BBVA, a Spanish bank, has already enrolled as the platform’s first client. The bank will likely test VTAP and start a pilot project next year.
VTAP could prove to be instrumental for the crypto industry, owing to its utility among banks. Using it, the scale for tokenization could scale massively. Moreover, asset tokenization is a growing market and will likely continue to be so.
Another major advantage of VTAP is that banks would be able to issue their own tokens. At the same time, it will follow all regulatory processes, ensuring protection for clients and other users. These two reasons could be the two biggest factors that could propel tokenization in a big way. Various assets like real estate, bonds, and commodities are some popular real-world assets that could undergo tokenization through VTAP.
Further, the use of smart contracts in VTAP will enable pre-set agreements to be executed and may weed out illegal actions. This way, banks could avoid disputes and impose penalties or fines automatically based on the contracts. While it is a start, VTAP does hold huge potential to boost asset tokenization by countering a few ongoing challenges.
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