Swift released results from a new series of experiments that show its infrastructure can facilitate the transfer of tokenized value across multiple public and private blockchains. The findings have potential to remove significant friction slowing the growth of tokenized asset markets and enable them to scale globally as they mature.
One issue challenging investors and institutions is that tokenized assets are managed on different blockchains, each with its own functionality and liquidity profile. Interoperability between these blockchains is crucial, otherwise financial institutions must build connections to each platform, creating significant operational challenges and cost.
Working with more than a dozen major financial institutions and market infrastructures and Chainlink, a Web3 services platform, Swift has successfully demonstrated that it can provide a single point of access to multiple networks using existing, secure infrastructure, thereby significantly reducing operational challenges and investment required for institutions to support the development of tokenized assets.
Tom Zschach, chief innovation officer at Swift, said in a statement: “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.”
Nigel Dobson, Banking Services Portfolio Lead at ANZ, said in a statement: “ANZ is actively exploring the use of decentralised networks and tokenisation via a ‘test and learn’ approach, particularly in underserved markets such as the trading of nature-based assets. Establishing interoperability between existing financial market infrastructure and multiple blockchains will be critical for greater adoption so we were naturally delighted to participate in this experiment with the Swift community.
Alain Pochet, head of Client Delivery, Securities Services at BNP Paribas, said: “With the increasing number of blockchains, the task of connecting our traditional technical platforms and ensuring interoperability between blockchains presents a growing challenge that we must overcome. In this regard, the experiment demonstrated the potential to leverage the extensive connectivity already established with Swift.”
Thilo Derenbach, head of Business Development & Commercialisation for Digital Securities Services at Clearstream, said in a statement: “As a provider of financial market infrastructure, Clearstream has a key role in supporting the financial industry in its transition to the digital era. Driving digitisation, supported by latest technologies and the tokenisation of assets, is a key topic for us at Clearstream. Joint partnerships and experiments like these help progress the industry innovation agenda while at the same time offering solutions for the interoperability of existing and future ecosystems.”
Jennifer Peve, managing director and global head of Strategy & Innovation at DTCC, said in a statement: “As a financial market infrastructure provider, DTCC is committed to co-ideating and developing solutions to connect the broadest set of market participants and ensure that innovative solutions don’t form in silos and deliver maximum value. We are pleased to engage with Swift on this important experiment that has taken meaningful steps in understanding what cross-network interoperability could mean in the future.”
Stephanie Lheureux, head of Digital Assets Excellence Centre at Euroclear, said in a statement: “We are delighted to have participated in this important project collaborating with other Financial Market Infrastructures (FMI) and institutions with the aim to tangibly unlock DLT value through interoperability experiments. As an FMI, our approach to innovation has been to develop solutions in cooperation with our ecosystem with the objective to continuously drive efficiencies to reduce cost and risk.”
Alexandre Kech, head Digital Securities at SIX Digital Exchange (SDX), said in a statement: “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.”
Sergey Nazarov, co-founder at Chainlink, said in a statement: “It’s now clear that both top global banks and leading market infrastructures believe there will be greater adoption of digital assets across the entire banking industry, and that this adoption will happen using multiple different blockchain technologies at the same time. The collaboration between Swift, over ten 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.”