Visa is testing whether privacy-enabled blockchain networks can support institutional stablecoin settlements without exposing sensitive transaction data, in a proof of concept with stablecoin infrastructure company Brale and Canton Network, a licensed ledger backed by major Wall Street firms.

Design, announced On Thursday, it is using SBC, a U.S. dollar-backed stablecoin issued by Brale, to simulate institutional payment flows in Canton as Visa evaluates whether SBC can become the next stablecoin option in its settlement program.

The initiative is a continuation of Visa’s previous experiments using stablecoins for settlements on public blockchains he started in 2021 with USDC on Ethereum settlement, but our current focus is on banks and market infrastructure providers who want the efficiency of onchain without broadcasting counterparties, positions or flows on a public ledger.

The push comes as policymakers and analysts predict a broader shift in how payment stablecoins are used.

S&P Global Ratings he said in a report on Thursday that global stablecoin issuance has now surpassed $300 billion across currencies, with the majority of demand still tied to cryptocurrency trading.

Related: Solayer launches Visa-compatible card for USDC payments

US payment stablecoins, which are compliant with the Guiding and Establishing National Innovation in US Stablecoins (GENIUS) Act, will expand to merchant remittances and certain types of commercial payments once the regulations are finalized, with one of the most promising near-term employ cases being cross-border payments, according to the report. However, such flows currently represent only a minimal, although growing, share of global international payment volumes.

Canton Network at the heart of institutional privacy efforts

Canton, developed by Digital Asset, brings together licensed blockchain applications operated by institutions including JPMorgan, Goldman Sachs, BNP Paribas and Depository Trust & Clearing Corporation.

Visa and Brale are exploring private stablecoin settlements. Source: BusinessWire

Unlike public networks, Canton is designed in such a way that only transaction participants and authorized regulators can see specific transaction data, while enabling atomic settlement of tokenized assets, monetary instruments and other financial contracts.

The proof of concept will evaluate how Canton’s privacy architecture can support faster, more programmable settlements while enabling financial institutions and payment companies to maintain tight control over the visibility of sensitive transaction and settlement data, Visa and Brale said in the release.

For banks, the stakes go beyond technological experimentation. Over time, S&P Global said stablecoins could threaten part of banks’ payments income and shift funding away from insured retail deposits and toward more concentrated wholesale balances.

The report says banks that issue stablecoins or tokenized deposits themselves may also take advantage of up-to-date fee and financing opportunities, forcing huge financial institutions to test privacy-preserving settlement networks that can support GENIUS-style payment stablecoins and tokenized deposits.

Cointelegraph reached out to Visa, Brale and Digital Asset but did not receive a response via publication.

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