As part of its cryptocurrency strategy, Visa is working to enable customers to switch between traditional currencies and digital assets through the company’s platform—with stablecoin settlements used for transactions.
Visa is developing a system to settle transactions in fiat currencies converted into stablecoins.
Cuy Sheffield, head of Visa’s cryptocurrency division and co-founder of the firm behind TrustToken (one example among many), discussed his company’s plans for stablecoins at a recent conference. Visa is working to create a system that will let conventional fiat currency be converted into blockchain-based stablecoins and vice versa.
Visa has been investigating ways to make money transfers quicker and more accessible, but it still relies on the SWIFT network for settlements. The limitations of the SWIFT network prevent Visa from executing transfers as frequently as desired. Hence, Visa has been experimenting with accepting settlement payments through stablecoins (cryptocurrencies whose prices are pegged to an asset or basket of support).
In a recent meeting with shareholders, Al Kelly—former CEO of PNC Financial Services Group—revealed that he believes central bank digital currencies and private stablecoins could significantly impact the payment industry.
Visa’s history with cryptocurrency and blockchain
Visa’s plans to explore digital assets and blockchain technology come as demand for cryptocurrencies like Bitcoin rises globally. Building muscle memory around settlements with digital assets makes people more likely to use digital currencies as a mainstream form of payment.
The reason why stablecoins have become so popular is because of the success of Tether. In 2022, USDT was used for $18.2 trillion in transactions and surpassed Visa’s market cap by more than 100%. This makes it easy to see why Visa has chosen stablecoins as a target in its crypto strategy—its market cap of $47 trillion surpasses Mastercard’s and Visa’s, respectively, at $14.1 trillion and $7.7t.
Despite the recent decline in cryptocurrency prices, Visa remains dedicated to exploring blockchain-based solutions that could improve its services. In a January 24th interview with CNBC’s Squawk Box Asia, Al Kelly (Visa’s CEO) declared that— Visa is optimistic about the future of cryptocurrency.
Visa has forged alliances with cryptocurrency firms and is promoting its cards to buy non-fungible tokens (NFTs) and other cryptocurrencies. In May 2022—just last month!—the company enabled direct crypto for fiat sales via its cards.
In October 2022, JPMorgan and Visa agreed to join forces in a significant partnership—they would merge their global private blockchain systems, B2B Connect and Link.
