The interbank global network SWIFT is developing a solution that will allow its members to access digital assets and currencies via its network. The company announced this today, noting that it wants users to be able to rely on its infrastructure for using fiat, regulated digital currencies, and tokenized assets.
According to its announcement, this is the next step in its evolution as the global banking infrastructure, and it has started making efforts towards achieving this goal by creating a single interoperable system for institutions to access all types of assets and currencies.
It said:
“Our vision is for our members to be able to use their SWIFT connection to transact interchangeably using both existing and emerging asset and currency types.”
The company also noted that interest in the digital assets industry, particularly tokenization, has been growing among investors. It cited a survey by Celent and BNY Mellon that showed 91% of institutional investors will invest in tokenized assets. This interest is mostly due to the industry’s projected potential, as the Standard Chartered study predicted that the tokenization market could be worth $30 trillion by the next decade.
SWIFT to focus on interoperability of existing and emerging assets
The company plans to focus on making emerging assets and networks interoperable with its network. It notes that its goal is to prevent “digital islands,” a common phenomenon due to the fragmentation of blockchain platforms with different technologies and regulatory environments. It identified this as one of the major challenges institutional investors face when dealing with tokenization platforms.
SWIFT will rely on blockchain technology to address this problem and integrate these platforms into one system. It notes that it has been testing this technology and has already achieved significant success, which shows how its infrastructure can support interoperability for multiple networks and asset types.
The company wrote:
“Our successful blockchain interoperability experiments showed how Swift’s infrastructure can facilitate the transfer of tokenised value across public and private blockchains. And our Phase 1 and Phase 2 CBDC sandbox projects demonstrated how we can interlink CBDCs on different networks and interlink multiple asset and cash networks.”
Consequently, it plans to build on the success of the sandbox projects to develop real-world solutions enabling several digital assets and currencies. The company wants to “enable multi-ledger Delivery-versus-Payment (DvP) and Payment-versus-Payment (PvP) transactions” so that users can trade tokenized assets directly through its network.
However, it noted that the absence of a globally regulated digital form of money would make it difficult to enable DvP fully. Therefore, it wants to connect tokenized asset settlement with a cash payment layer on its network. It plans to use digital money such as CBDCs and regulated stablecoins later.
What could this mean for blockchain networks?
Meanwhile, multiple reactions have followed the news from the crypto community, with many people mostly misinterpreting what it could mean for blockchain technology. Head of digital assets research at VanEck Mathew Sigel erroneously said that Ethereum is the only layer-1 network SWIFT mentioned using for its experiments.
However, Chainlink community liaison Zach Rynes has corrected this notion, saying the collaboration is actually between SWIFT, Chainlink, and over a dozen financial institutions using Chainlink CCIP for interoperability between Swift and three blockchain networks: Ethereum, Avalanche, and Quorum.
He further corrected the claim that “regulated digital asset” means Ripple XRP, noting that this has nothing to do with XRP and that the only blockchain project directly involved is Chainlink.
