Visa announced a major industry first in bridging the worlds of digital and traditional fiat currencies: the use of USD Coin (USDC), a stablecoin backed by the US dollar, to settle a transaction with Visa over Ethereum—one of the most actively used open-source blockchains. visa crypto
Visa is piloting the capability with Crypto.com, a Visa partner and one of the world’s largest crypto platforms, and plans to offer the USDC settlement capability to additional partners later this year.
Support for digital currencies as a new type of settlement currency marks an important step forward for Visa’s network of networks strategy, which is designed to enhance all forms of money movement, whether on the Visa network, or beyond. By harnessing its global presence, partnership approach, and trusted brand, Visa is focused on adding differentiated value to the ecosystem and making cryptocurrencies more secure, useful, and applicable for payments.
Visa has spent the last year establishing a pathway for digital currency settlement within Visa’s existing treasury infrastructure, a platform that moves billions of dollars each day across thousands of institutions in more than 200 markets and 160 currencies. Working with Anchorage, the first federally chartered digital asset bank and an exclusive Visa digital currency settlement partner, Visa has launched a pilot that allows Crypto.com to send USDC to Visa to settle a portion of its obligations for the Crypto.com Visa card program.
Visa’s standard settlement process requires partners to settle in a traditional fiat currency, which can add cost and complexity for businesses built with digital currencies. The ability to settle in USDC can ultimately help Crypto.com and other crypto native companies evaluate fundamentally new business models without the need for traditional fiat in their treasury and settlement workflows. Visa’s treasury upgrades and integration with Anchorage also strengthen Visa’s ability to directly support new central bank digital currency (CBDC) as they emerge in the future.
“Crypto-native fintechs want partners who understand their business and the complexities of digital currency form factors,” said Jack Forestell, executive vice president and chief product officer, Visa. “The announcement today marks a major milestone in our ability to address the needs of fintechs managing their business in a stablecoin or cryptocurrency, and it’s really an extension of what we do every day, securely facilitating payments in all different currencies all across the world.”
Kris Marszalek, Co-founder and CEO of Crypto.com said: “We’ve seen record-breaking growth in our business and the broader crypto ecosystem over the last year. To continue accelerating the world’s transition to cryptocurrency, we need partners who understand the opportunity and the tools that will help us get to market faster and more efficiently. Having been a Visa partner for several years, we’re excited to deepen that relationship through our global agreement and to pioneer an exciting world-first in stablecoin payments.”
“Anchorage’s platform has been purposefully built for institutions like Visa to build new products in crypto. We’ve been with Visa every step of the way since 2019 and are extremely pleased to see these first stablecoin payment rails come to life through Anchorage APIs,” said Diogo Mónica, Co-Founder and President of Anchorage.
David Puth, CEO of Centre, which oversees the licensing of USDC, said: “Visa is leading the market with its innovative approach to payments in many forms. We are very impressed with their efforts. Having USDC on the Visa network is an outstanding next step in our mission to connect the world using stablecoins built on Centre standards, starting with USDC.”
The journey to USDC visa crypto
A vital first step was identifying the first digital asset we would offer our clients as an alternative to traditional settlement currency. Our due diligence efforts include an examination of:
- Demand: What assets are our clients interested in settling and receiving? Is there a vibrant ecosystem and development community to support this asset?
- Stability: Does the price fluctuate? Is there sufficient liquidity to convert to and from the digital asset? How long would transfers in and out of this digital asset take and how does that impact the settlement process?
- Security: Does the asset have a clear set of compliance and regulatory protocols supporting it? Are there trustworthy infrastructure players and partners that support it? Is there a clear governance or scheme supporting the asset? Are there any major vulnerabilities or risks?
USDC measured up against all these criteria. USDC is nearing $10B in circulating supply with a robust developer community and growing adoption across crypto companies and financial institutions alike. Furthermore, USDC and the Centre Consortium (the governing body behind USDC) have also shown a track record of clear compliance and regulatory engagement to instill confidence in USDC. In addition to the explosion of supply and usage, we’ve also seen the emergence of new use cases forming around USDC, including cross border B2B payments, trade settlement, and remittances.
Bridging digital and fiat
Having selected the USDC stablecoin as our pilot asset, we set about making the infrastructure upgrades necessary to mesh key components of digital currencies with Visa’s treasury operations. We’ve been hard at work over the last several months, working to support a number of key functions:
- Support reconciliation and currency conversion for stablecoins such as USDC
- Integrate Visa’s treasury systems with Anchorage, as Visa’s digital asset settlement agent
- Support a new Visa settlement report that includes settlement obligations along with public blockchain addresses for account management of crypto wallets and issuers.
After months of anticipation and careful planning, we completed the first successful settlement transaction this month —with Crypto.com sending USDC to Visa’s Ethereum address at Anchorage. One small step forward for Visa’s settlement platform, one giant step forward for the integration of digital and traditional fiat currencies. After further testing and additional conversations with clients, partners and members of the regulatory community, we hope to launch this capability for other partners in the year ahead. visa crypto
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