The Society for Worldwide Interbank Financial Telecommunication (SWIFT) said in a press release on June 6th that it would work with major banks and financial institutions to test how its vast infrastructure can transfer tokenized assets between private and public blockchains. 

Image courtesy of 123rf. via The Tokenist

Chainlink will enable the interconnectivity between different blockchains, SWIFT stated.

SWIFT Taps Chainlink to Provide Blockchain Interconnectivity

SWIFT, an extensive messaging network used by banks and financial institutions to share information, announced on Tuesday it would collaborate with more than 12 global banks to test how they can use the existing SWIFT infrastructure to transfer tokenized assets across public and private blockchains.

Banks that will participate in the project include 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). In addition, leading Web3 service provider Chainlink is also involved in the initiative to enable inoperability between the blockchains.

“This latest round of experimentation builds on a series of successful trials in 2022, and also will explore how the industry could address potential operational and regulatory pitfalls facing financial institutions when operating in blockchain environment.”

– SWIFT said in the press release.

The Initial Experiments

In its press release, SWIFT said it believes it is uniquely positioned to improve blockchain interoperability thanks to its existing infrastructure that can be used as a “single access point.” That said, SWIFT will initially test transfers of tokenized assets between two wallets on the same public blockchain – the Ethereum Sepolia testnet.

Then, the second experiment will focus on tokenized asset transfers from Ethereum (ETH-X) to a private blockchain. Finally, it stated that SWIFT plans to test transferring tokenized assets from Ethereum to another public blockchain network.

While doing this, SWIFT will take advantage of Chainlink’s unique services, using the blockchain as “an enterprise abstraction layer” to secure the connection between SWIFT and Ethereum. At the same time, Chainlink’s Cross-Chain Interoperability Protocol (CCIP) will allow complete interoperability between the source and the involved blockchains.

This initiative is not the first time SWIFT explored blockchain and distributed ledger technology (DLT) use cases. Last year, the organization hinted at plans to explore how central bank digital currencies (CBDCs) can enhance cross-border transactions.

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