Swift Claims Tokenisation Transfer Success

Swift has released the results from a series of experiments that it says show its infrastructure can seamlessly facilitate the transfer of tokenised value across multiple public and private blockchains. The messaging utility says the findings have potential to remove significant friction slowing the growth of tokenised asset markets and enable them to scale globally as they mature.

Swift observes that while tokenisation is in its “infancy”, there is a majority belief that it will transform asset management in particular by increasing efficiency, enabling fractional ownership, and open up opportunities to more investors. It adds though, that one issue challenging investors and institutions, is that tokenised 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,” Swift asserts.

Working with more than a dozen major financial institutions and market infrastructures and Chainlink, a Web3 services platform, Swift says it 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 tokenised assets.

“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,” says Tom Zschach, chief innovation officer at Swift. “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 experiments took place with ANZ, BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange and The Depository Trust & Clearing Corporation. Chainlink was used as an enterprise abstraction layer to securely connect the Swift network to the Ethereum Sepolia network, while Chainlink’s Cross-Chain Interoperability Protocol (CCIP) enabled complete interoperability between the source and destination blockchains.

In addition to demonstrating that existing Swift infrastructure can provide a secure, scalable way for financial institutions to connect to multiple types of blockchain, Swift says the experiments advanced understanding around the technical and business requirements for interacting with business and public blockchains. They also explored the value of a blockchain interoperability protocol for securely transferring data between existing systems and a potentially unlimited number of blockchains.

The experiments looked at the design and technical development of a solution and considerations around data privacy and governance, operational risk, and legal liability. Transfers of simulated tokenised assets took place – between two wallets on the same public Distributed Ledger Technology network; between two wallets on different public blockchains; and between a public and private blockchain network.

“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,” says Alain Pochet, head of client delivery, securities services at BNP Paribas. “In this regard, the experiment demonstrated the potential to leverage the extensive connectivity already established with Swift.”

Alexandre Kech, head of digital securities at SIX Digital Exchange, adds, “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.”

Meanwhile, Sergey Nazarov, co-founder at Chainlink, says, “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.”