As a seasoned researcher who has closely followed the evolution of financial technologies over the past decade, I find SWIFT’s recent announcement intriguing. The organization’s focus on enabling its members to transact with both traditional and emerging crypto assets is a significant step towards bridging the gap between conventional finance and the digital asset world.
On September 11th, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) declared its intention to create practical methods that allow their members to interact with and exchange regulated digital assets and currencies in the real world.
The organization aims to empower its members by facilitating trades not only with conventional assets but also with modern cryptocurrencies through their internal banking system.
Swift refers to a collaborative organization founded in 1973, headquartered in Belgium, which is collectively owned by financial institutions and businesses that utilize its services.
Ethereum Connections?
Matthew Sigel, who leads digital assets research at VanEck, noted that in their discussions, SWIFT has only referred to Ethereum among all layer-1 blockchains.
Additionally, he pointed out that the research they conduct centers around the compatibility between conventional banking systems and innovative tech like digital tokens and Central Bank Digital Currencies (CBDCs).
Swift unveils its fresh endeavors in digital assets, stressing the importance of regulated settings. Their ongoing studies center on seamless integration between conventional banking and modern innovations, including tokenized assets and central bank digital currencies (CBDCs). Notably, Ethereum (#ETH) is the only blockchain platform they’ve referenced in these discussions.
— matthew sigel, recovering CFA (@matthew_sigel) September 11, 2024
The statement highlights the rising trend of tokenized real-world assets (RWA), referencing a study by Standard Chartered which predicts their total market value could surge to $30 trillion by 2034. Furthermore, it emphasizes that investor enthusiasm for these tokenized assets is high, as 91% of institutional investors express interest in this investment area.
Swift pointed out that we’re currently seeing numerous “digital archipelagos” because various platforms, technologies, and rules are not aligned. Additionally, institutional investors often face a significant degree of intricacy when managing several tokenization systems.
SWIFT has been experimenting with blockchain transfers and RWA, noting:
Through our blockchain interoperability tests, we demonstrated that Swift’s system is capable of smoothly moving tokenized assets between both public and private blockchain networks.
Instead, the aim is to develop its system to facilitate access to digital assets and currencies for multiple applications, allowing securities investors to execute real-time transactions involving tokenized assets, both buying and selling at the same instant.
At first, the payment process will utilize traditional currencies. However, in the future, it may support digital versions of money like Central Bank Digital Currencies (CBDCs), tokenized bank money from commercial banks, and regulated stablecoins.
Over the next few months, SWIFT will keep refining technological tools in collaboration with the financial industry.
No Crypto on SWIFT
Although the news seems advantageous for cryptocurrencies, it’s quite improbable that everyday users can transfer decentralized digital assets like Bitcoin or Ethereum through this network. Nonetheless, it might significantly benefit the fundamental structure, including platforms like Ethereum and Chainlink.
In September 2023, SWIFT performed a trial using banks that utilized Chainlink’s Cross-Chain Interoperability Protocol (CCIP) as their foundation.
Previously in that year, SWIFT teamed up with Chainlink for a project involving multiple banks to explore the potential of connecting with various blockchain platforms.
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2024-09-15 07:23