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Swift exploring blockchain interoperability for tokenised asset settlements

on Jun 6, 2023
  • Institutional investors are increasingly considering investments in tokenised assets.
  • However, there is a challenge since these assets are on different blockchains that are not interoperable.
  • Swift will conduct experiments with financial institutions to test for blockchain interoperability.

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Swift has announced that they are collaborating with their global community to explore blockchain interoperability for seamless tokenized asset settlements.

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

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Removing friction in international transactions

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

In the press statement today, Swift stated that they are embarking on a new set of experiments in collaboration 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 tokenised value over a range of public and private blockchain networks.”

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

Commenting on the collaboration, the co-Founder of Chainlink, Sergey Nazarov, said in a statement obtained by Invezz:

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“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 transact trillions of dollars using smart contracts. Not only would this grow the blockchain industry by multiples from where it is today, but it would clearly show capital markets the many benefits of adopting on-chain finance.”

Swift conducted similar trials in 2022 which were largely successful and will be seeking to build on the success to explore how the industry could address potential operational and regulatory challenges facing financial institutions when operating in the blockchain environment.

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