Swift has unveiled the results of a series of experiments showcasing its capability to seamlessly facilitate the transfer of tokenised value across multiple public and private blockchains.
The implications of these findings have the potential to eliminate significant hurdles hampering the growth of tokenised asset markets, also allowing them to scale globally as they mature.
The nascent concept of tokenisation has captured the attention of the financial industry, with a whopping 97 per cent of institutional investors believing it will revolutionise asset management, offering enhanced efficiency, reduced costs as well as wider accessibility through fractional ownership.
A key challenge faced by investors and institutions alike is the management of tokenised assets on diverse blockchains, each possessing its unique functionality and liquidity profile.
Swift’s experiments, conducted in collaboration with over a dozen major financial institutions and Chainlink, the Web3 services platform, have demonstrated the possibility of providing a singular point of access to numerous networks via existing secure infrastructure. This breakthrough substantially mitigates operational challenges and the investment required by institutions to support the growth of tokenised assets.
Experiment success
Tom Zschach, chief innovation officer at Swift, said: “Interoperability is at the heart of everything we are doing at Swift to facilitate the seamless flow of value across the world in the face of increasing fragmentation. For tokenisation to reach its potential, institutions will need to be able to seamlessly connect with the whole financial ecosystem.
“Our experiments have demonstrated clearly that existing secure and trusted Swift infrastructure can provide that central point of connectivity, removing a huge hurdle in the development of tokenisation and unlocking its potential.”
The collaborative experiments spanned major financial institutions such as ANZ, BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX) and The Depository Trust & Clearing Corporation. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) was used to ensure seamless communication between Swift’s network and the Ethereum Sepolia network. The initiative aimed to establish interoperability between source and destination blockchains.
These experiments also advanced understanding around the technical and business requirements for interacting with various blockchains. The findings explored the value of a blockchain interoperability protocol for secure data transfer between existing systems and an array of blockchains. The experiments examined considerations encompassing data privacy, governance, operational risk, legal liability, and successfully facilitated the transfer of simulated tokenised assets.
Project engagement
Collaborators in the innovative venture says the partnership’s success has demonstrated a promising path towards achieving seamless interoperability, vital for the broader adoption of digital assets in the global financial landscape.
Alexandre Kech, head digital securities at SDX, said: “This interoperability exercise is critical to the understanding on how banks and FMIs can realise the promise of blockchain for institutional business, that is, the building of a multi-party, regulated global digital asset agnostic trading, settlement and asset servicing 24/7 infrastructure for issuers and investors.”
While Sergey Nazarov, co-founder at Chainlink, also commented: “The collaboration between Swift, over 10 of the largest financial institutions, and Chainlink also proved that interoperability across chains is critical to enabling the next stage of digital asset adoption across the global financial system. When combining Swift and CCIP, we were able to show that this new level of interoperability across various blockchains is now possible with minimal resources from even the largest banks and market infrastructures.”
