Visa has become the first major payments network to settle a transaction with an issuing or acquiring partner by exchanging funds in digital currency rather than in traditional fiat currency.
The pilot transaction with the Crypto.com cryptocurrency platform was settled using USD Coin (USDC) — a stablecoin backed by the US dollar — over open-source blockchain Ethereum in partnership with the Anchorage digital asset platform.
“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,” the payments network says.
“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.”
A Visa blog post explains how the digital currency settlement system has been developed.