“For tokenization 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 tokenization and unlocking its potential.”
Swift has unveiled the results of a groundbreaking series of experiments that demonstrate its infrastructure’s capability to seamlessly facilitate the transfer of tokenized value across multiple public and private blockchains.
These findings hold significant promise for streamlining the growth of tokenized asset markets and enabling their global scalability as they continue to evolve.
Tokenization to revolutionize asset management
Tokenization, while still in its nascent stage, has garnered attention, with 97% of institutional investors believing that it will revolutionize asset management, offering enhanced efficiency, cost reduction, and broader accessibility to investors through fractional ownership.
One of the primary challenges faced by investors and institutions in this evolving landscape is the fragmentation of tokenized assets across various blockchains, each with its unique functionality and liquidity profile. To address this issue, interoperability between these blockchains becomes paramount to avoid the costly and operationally intensive process of building connections to each platform individually.
In collaboration with more than a dozen major financial institutions, market infrastructures, and Chainlink, a leading Web3 services platform, Swift has successfully demonstrated its ability to provide a unified entry point to multiple blockchain networks, utilizing its existing secure infrastructure. This breakthrough significantly reduces operational complexities and financial investments required for institutions to support the development of tokenized assets.
These experiments align with Swift’s broader strategy to ensure secure global interoperability, especially as new technologies and platforms continue to emerge. The experiments build on Swift’s previous efforts to illustrate how its infrastructure can support the financial community in connecting Central Bank Digital Currencies (CBDCs) and other digital assets with both new and existing payment systems.
Tom Zschach, Chief Innovation Officer at Swift, emphasized the importance of interoperability, stating, “For tokenization 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 tokenization and unlocking its potential.”
ANZ, BNPP, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds, SDX, DTCC
Swift collaborated with several major financial institutions on these experiments, including ANZ, BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, Lloyds Banking Group, SIX Digital Exchange (SDX), and The Depository Trust & Clearing Corporation.
Chainlink played a pivotal role as an enterprise abstraction layer, securely connecting the Swift network to the Ethereum Sepolia network. Chainlink’s Cross-Chain Interoperability Protocol (CCIP) enabled seamless interoperability between source and destination blockchains.
The experiments delved into the design and technical development of a solution, considering various factors such as data privacy, governance, operational risk, and legal liability.
Transfers of simulated tokenized assets took place between wallets on the same public Distributed Ledger Technology network, between wallets on different public blockchains, and between a public and private blockchain network.
Swift will continue to work closely with the financial community to identify the most practical use cases for the adoption of tokenized assets, with a focus on secondary trading of non-listed assets and private markets.
Swift’s successful experiments represent a significant step toward a more interconnected and interoperable blockchain landscape, potentially paving the way for the seamless transfer of tokenized assets across the globe. As tokenization continues to gain traction, the ability to facilitate such transfers efficiently and securely could play a pivotal role in shaping the future of financial markets.
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