Swift, the global messaging network used by financial institutions, has announced its collaboration with major players in the financial sector to improve interoperability within the increasingly fragmented blockchain networks. This move is aimed at removing friction from the settlement of tokenised assets.
Institutional investors are showing greater interest in tokenised assets, seeing them as a new form of value. However, the diversification of blockchain networks, each with its own functionality and liquidity profile, creates a complexity that poses a significant challenge in managing and trading these assets.
Swift is partnering with more than a dozen financial institutions including ANZ, BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), and The Depository Trust & Clearing Corporation (DTCC) to find a solution. They aim to leverage their existing Swift infrastructure to facilitate the transfer of tokenised value across both public and private blockchain networks. Chainlink, a leading Web3 services platform, will ensure connectivity across these blockchains for the trials.
Despite the potential of blockchain technology to enhance efficiency, reduce costs, and create opportunities in the industry, trading tokenised assets remains a niche activity within regulated spaces. Swift's plan could potentially ease interaction with multiple blockchain networks in a secure and trusted manner.
Instead of building new infrastructure and technology stacks, financial institutions aim to use their existing infrastructure to connect to blockchain ledgers. This move would simplify architecture, minimise investment costs, and reduce the risk of technology obsolescence.
Swift's experiments aim to shed light on the technical and business requirements needed to interact with multiple blockchain networks. They will also highlight the potential value of using a blockchain interoperability protocol to transfer data and value securely between legacy systems and multiple blockchains.
