Banks to use Swift network for crypto transaction trials

Banks are gearing up to trial crypto transactions on the Swift network as the industry’s shift toward tokenization accelerates. Financial institutions will soon use Swift’s platform to settle “digital assets and currencies,” with pilots kicking off next year. 

Swift — the Society for Worldwide Interbank Financial Telecommunication — was formed in 1973 and offers a messaging network through which international payments are initiated.

With more than 11,000 institutions connected to the network, Swift carries more than 5 billion financial messages each year.

“For digital assets and currencies to succeed on a global scale, it’s critical that they can seamlessly coexist with traditional forms of money,” Swift Chief Innovation Officer Tom Zschach said in a statement.

Swift is not new to experimenting in this space.  

The organization claimed in 2022 that it had successfully shown that Central Bank Digital Currencies (CBDCs) and tokenized assets can move seamlessly on existing financial rails. When establishing a global CBDC system, it added, familiarity — alongside the infrastructure — is an important facet.

Then last year, Swift sought to link private and public blockchains in a trial collaboration with Chainlink and finance giants such as BNP Paribas and BNY Mellon — tests it ultimately deemed successful.

Read more: Swift details findings in tests of Chainlink’s cross-chain interoperability 

Swift also has its hand in other efforts related to tokenized assets — a space Standard Chartered said could reach $30 trillion by 2034.

It is participating in Project Agora (led by the Bank for International Settlements), which is exploring how tokenization can enhance wholesale cross-border payments. 

Swift is also looking into how its “interlinking capabilities” could integrate the US Regulated Settlement Network, for example, with traditional financial systems. Visa and Mastercard said in May they would join banks like JPMorgan and Citigroup to test this network 

Colin Butler, Polygon’s global head of institutional capital, previously told Blockworks that such entities getting closer to aligning on a standard represents “the five-yard-line for mass institutional adoption.”

Swift’s announcement came the same day that Visa created a platform in a bid to help financial institutions issue fiat-backed tokens and test out their use cases. 

Spain-based BBVA has been working within the Visa Tokenized Asset Platform (VTAP) sandbox this year and looks to launch a pilot with certain customers in 2025 on the Ethereum blockchain.

A modified version of this article first appeared in the daily Forward Guidance newsletter. Subscribe here so you don’t miss tomorrow’s edition.

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