Getting Real: Visa, SWIFT, and Stablecoins

In 2015, I was that annoying guy in your Zoom meeting who keeps bringing up crypto. I'd just sold my consultancy to a large bank, and I had agreed to stick around as an engineering executive for three years. In addition to my official responsibilities, I became fascinated with crypto. I started pushing management to build teams, to start experimenting. Let's create our own blockchains! Let's innovate on payment technologies! I was relentless. Management would humor me, nodding along in meetings. However, after I kept pushing, they eventually gave me a blunt answer: there was no appetite at the bank to take on the risk that crypto presented.

At the time, I was indignant. Couldn't they see the future unfolding right before their eyes? With a few years of hindsight, I've come to realize their hesitation was the right move.

Seasoned executives at large institutions understand something that sounds defeatist but really isn't: big institutions will not, and often should not, be the ones to innovate breakthrough technologies. The best strategy—something I learned as I gained some humility—is to wait for the industry to mature, for startups to risk everything on innovative ideas, and then become an adopter when something is fully proven to work.

"Change takes time in large institutions, but when you move, you move markets, you move entire industries,"

- Simon Taylor, Head of Strategy at Sardine.

As long as you time this right, you can leverage your massive distribution to broaden your service offerings on the new technology. The Internet proves this for financial services—few banks were pioneers, but despite competition from upstarts, they were able to adopt the Internet and expand their already dominant positions.

The trick, of course, is getting the timing right. Jump in too early, and you risk failing completely. Jump in too late, and the market may have already left you behind.

"I think it's this really interesting dynamic of, can the company with distribution be able to innovate before the innovators end up getting distribution?"

— Cuy Sheffield, Head of Crypto at Visa.

So, is the timing right for tokenized assets?

The maturation of tokenized assets has been slower than expected. Banks recognize the potential for programmable, permission-less, and composable digital representations of fiat money, but until recently, the space has been fragmented.

There is reason to think 2025 will be the year this all changes, partly because of two announcements last week that could pave the way for banks to begin using tokenized assets at scale.

First, Visa announced the Visa Tokenized Access Platform (VTAP) and a partnership with BBVA to begin experimenting on the platform. Second, SWIFT announced that it will support live trials of digital-asset transactions on the SWIFT messaging network starting next year.

For the past ten years, banks have been tinkering with blockchains and experimenting with stablecoins. Examples include JPMorgan’s work with the Monetary Authority of Singapore on Project Guardian and Citi’s collaboration with Ava Labs to tokenize private funds. The tinkering has been interesting, making for fun little announcements that PR departments love. Yet, the experiments have been limited in scope, and the tokenized asset marketplace remains deeply fragmented.

Francisco Maroto, Head of Blockchain and Digital Assets at BBVA, put it well in an interview on the Tokenized podcast:

"The journey has been quite a hell of a journey... you can imagine moving new things in a financial institution that was established more than 100 years ago."

The problem for Maroto is twofold: getting banks to adopt new technologies is a Sisyphean task—as evidenced by my own attempts at a large bank—but perhaps more importantly, without a network to settle tokenized transactions, the market will remain fragmented and never really get off the ground.

"...this journey took us to the conclusion that in all these pilots, in all these exchanges of tokens, you always need a cash leg, you always need the settlement, you always need to settle."

Put more simply, you can build all the blockchains and tokenized experiments you want, but it means nothing if you don't have rails that enable you to work with other banks.

The SWIFT Announcement

SWIFT isn't a payment network like Visa or PayPal; it's a messaging protocol that allows over 11,000 banks in more than 200 countries to communicate securely. Every day, about $5 trillion moves across this network. It's the silent workhorse of global finance, the kind of infrastructure you don't notice until it stops working.

Up until now, SWIFT has been cautiously experimenting with blockchain technology in controlled sandbox environments. But the recent announcement marks a significant shift: starting next year, commercial and central banks will be able to conduct live trials of digital-asset transactions on the SWIFT network. This doesn’t feel like another limited experiment designed mainly for a PR announcement; this is SWIFT committing to integrating support for tokenized assets into its protocol. 

Nick Kerigan, SWIFT's Head of Innovation, framed the move:

"What we don't want to see is the emergence of what we call 'digital islands' appearing. We've tried to help the industry figure out a way to ensure that wherever a digital asset or a digital currency is created, and whatever technology that's created on, that those can successfully work together with each other and the existing financial system."

In other words, the future of finance can't be a balkanized mess of incompatible platforms. SWIFT's initiative aims to bridge the various blockchain networks that banks have been tinkering with, creating interoperability in a space that's currently fragmented.  The evolution of SWIFT and other networks could remove the most significant bottleneck in realizing the potential of tokenized assets, which, according to Standard Chartered, could reach a total value of $30 trillion by 2030. 

SWIFT's live trials could be the key to unlocking this value. By enabling real money and assets to move between different blockchain ledgers on a global scale, SWIFT is attempting to provide the universal rails that the tokenized asset marketplace desperately needs. It's an acknowledgment that while individual banks can innovate in isolation, the real transformation happens when these innovations are connected.

Visa's Tokenized Asset Platform

It always surprises me that Visa isn’t recognized as a pioneering success in decentralized finance. It’s credit network, pioneered by Dee Hock, was built on the principles of decentralized finance. Like OpenAI, Visa was once a nonprofit whose sole purpose was to allow competing banks to leverage a decentralized credit card network. Hock described his vision for Visa through the term “chaordic”, a combination of chaos and order that is quite possibly the best term I’ve heard to describe the core ideas of crypto. This is how he described his model for Visa:

"It’s what you might call a reverse holding company, in that the core doesn’t own the parts; the parts own the core. If you examined it, it would look very much like the organs in a body, then the cells within the organs and the nucleus within the cells.”

The Visa Tokenized Asset Platform, if it succeeds, could be a worthy continuation of Hock’s legacy. And Cuy Sheffield, Visa’s Head of Crypto, seems like the kind of executive Hock would have picked to lead it. He is the rare financial industry executive who is vocal on social media and seems deeply connected to the crypto zeitgeist.  Through his work, Visa has conducted experiment after experiment on CDBCs (Central Bank Digital Currency), stablecoins, and with commercial banks interested in making tokenized assets a reality.

The VTAP platform is a significant step toward integrating tokenized assets into mainstream financial infrastructure. Last week’s announcement introduced the platform and established BBVA as its first bank collaborator.

VTAP is designed to help financial institutions issue and manage fiat-backed tokens on blockchain networks. In essence, it's a toolkit for banks to mint, burn, and transfer tokenized versions of fiat currencies—think digital dollars that are securely recorded on a blockchain.

What sets VTAP apart is its focus on programmability and integration. Banks can use Visa's APIs to seamlessly incorporate tokenized assets into their existing systems. This isn't about creating a parallel infrastructure; it's about enhancing what's already there. The platform employs an Ethereum-compatible blockchain for initial testing, providing a familiar environment for developers.

Key features of VTAP include:

• Programmability: Banks can automate processes and introduce new features using smart contracts, adding a layer of flexibility that's been missing from traditional financial instruments.

• API Integration: Secure minting, burning, and transferring of tokens become as straightforward as integrating with Visa's APIs.

• Blockchain Framework: By using a permissioned blockchain, Visa offers a controlled environment where banks can get comfortable with the technology before broader deployment.

• Integrated Custody Solutions: Visa provides built-in custody services for managing private keys, alleviating one of the major pain points for institutions wary of handling digital assets.

By offering a platform that simplifies the technical and operational challenges of tokenization, Visa is lowering the barrier to entry for commercial banks, which control over 90% of the world’s money supply. They're effectively saying, "We know this stuff is complicated, but we've done the heavy lifting—come join us."

This aligns with Visa's history. The company was built on the principles of decentralized finance before that was even a term. Dee Hock, Visa's founder, envisioned a system where competing banks could collaborate over a shared network. VTAP feels like a natural evolution of that vision, updated for the blockchain era.

The Convergence of Timing and Technology

So, is it finally the right time for banks to embrace tokenized assets? The signs are pointing to yes. The convergence of technological readiness, regulatory clarity (albeit still evolving), and industry willingness suggests we're on the cusp of something significant.

Banks and large financial institutions are starting to recognize that the risk of inaction may now outweigh the risk of engagement. The potential efficiencies, cost savings, and new revenue streams offered by tokenized assets are becoming too substantial to ignore.

Many hurdles remain. Regulatory uncertainty remains a significant concern. The recent debacles in the crypto world, from exchange collapses to security breaches, have made regulators wary. Banks will need to navigate this landscape carefully, balancing innovation with compliance.

Moreover, technological integration is no small feat. Legacy systems at large banks are notoriously difficult to upgrade. The technical debt accumulated over decades can't be erased overnight. But with entities like SWIFT and Visa paving the way, the path to integration becomes less daunting.

In the end, the question isn't whether tokenized assets will become a part of the financial mainstream—it's when. The announcements from Visa and SWIFT suggest that the timeline is accelerating. For banks and credit networks, the choice is clear: adapt and lead, or hesitate and follow.

It's time to dust off those crypto whitepapers, re-engage with the blockchain teams that have been languishing in the basement, and start making strategic moves. The industry is at an inflection point, and those who act decisively will shape the future of finance.