Rapidly exploring blockchain interoperability for tokenized asset settlements

Swift has announced that they are working with their global community to explore blockchain interoperability for seamless tokenized assets.

According to Swift, institutional investors are increasingly considering investments in tokenized assets when seeking alternative investments. However, investors face a complex challenge since the tokenized assets are tracked on different blockchain networks that are not interoperable.

Removing friction in international transactions

Swift aims to overcome the interoperability challenges among blockchains, which is key to the long-term scalability of the market and is in line with the company’s focus on removing friction in international transactions.

In today’s press release, Swift stated that it is embarking on a new set of experiments in partnership with several financial institutions and FMIs “including Australia and New Zealand Banking Group Limited (ANZ), BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear , Lloyds Banking Group, SIX Digital Exchange (SDX) and The Depository Trust & Clearing Corporation (DTCC) to test how firms can leverage their existing Swift infrastructure to efficiently instruct the transfer of tokenized value across a variety of public and private blockchain networks.”

Swift will partner with Chainlink, a leading Web3 service platform. Chainlink will provide connectivity across public and private blockchains for the experiments.

Commenting on the collaboration, Chainlink co-founder Sergey Nazarov told Invezz:

“This collaboration between Swift and Chainlink could pave the way for leading institutions like DTCC, Euroclear, BNP Paribas, BNY Mellon, Citi and many others to issue and trade trillions of dollars using smart contracts. Not only would this boost the blockchain industry by multiples from where it is today, but it will clearly show the capital markets the many benefits of adopting chain financing.”

Swift conducted similar trials in 2022 that were largely successful and will seek to build on its success to explore how the industry can address potential operational and regulatory challenges faced by financial institutions when operating in the blockchain environment.