The SWIFT global banking network paves the way for the integration of tokenized assets

On September 11, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced that it was “paving the way to real-world solutions that will enable our members to access and transact digital assets and regulated currencies.”

The organization has a vision to enable its members to transact traditional and emerging crypto assets on its interbank network.

SWIFT is a cooperative established in 1973 in Belgium and owned by the banks and other member companies that use its services.

Ethereum Connections?

VanEck’s head of digital asset research, Matthew Sigel, noted that the only Layer 1 blockchain SWIFT has ever mentioned in these communications is Ethereum.

He also noted that his experiments focus on interoperability between traditional finance and emerging technologies such as tokenized assets and CBDCs.

SWIFT announces new efforts in digital assets, emphasizing regulated environments.
His experiments focus on the interoperability between traditional finance and emerging technologies such as tokenized assets and CBDCs.
The only SWIFT L1 ever mentioned in these communications is #ETH. https://t.co/l1NZsICIQm pic.twitter.com/P7kndmqcOH

— matthew sigel, recovering CFA (@matthew_sigel) September 11, 2024

The announcement acknowledged the growth of tokenized real-world assets (RWA), citing Standard Chartered research that estimated its market size to reach $30 trillion by 2034. It added that market sentiment is certainly strong , with 91% of institutional investors interested in investing in tokenized assets.

SWIFT noted that there are currently fragmented “digital islands” due to divergent platforms, technologies and regulations. There is also a high level of complexity for institutional investors dealing with multiple tokenization platforms.

SWIFT has been experimenting with blockchain and RWA transfers, noting:

“Our successful blockchain interoperability experiments showed how Swift’s infrastructure can facilitate the transfer of tokenized value across public and private blockchains.”

However, it plans to evolve its infrastructure to provide access to digital assets and currencies in a variety of use cases and allow equity investors to simultaneously pay for and exchange tokenized assets in real-time.

“The payment tranche will initially be made using existing fiat currencies, but may later use forms of token money such as CBDC, tokenized commercial bank money, or regulated stablecoins.”

In the coming months, SWIFT plans to continue developing technical solutions with the financial community.

No Crypto on SWIFT

While the announcement looks promising for crypto, it is highly unlikely that users will be able to send decentralized digital assets like Bitcoin or Ethereum over the network. However, it could be a boon for the underlying infrastructure, such as Ethereum and Chainlink.

In September 2023, SWIFT conducted an experiment with banks leveraging the Chainlink Interoperability Protocol (CCIP).

Earlier that year, SWIFT announced a collaboration with Chainlink, which included several financial institutions to evaluate the feasibility of integrating with various blockchain networks.

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