SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is working with crypto data provider Chainlink to develop a proof-of-concept that will allow traditional financial institutions to integrate blockchain technology.
SWIFT Could Interact With Blockchain Assets
The two companies are working together on a cross-chain interoperability protocol (CCIP) to allow SWIFT to instruct on-chain token transfers. The CCIP in question was launched by Chainlink in August 2021 and is a global standard for cross-chain messaging, data, and token transfer. As a result, the interbank network will be able to communicate and transfer cryptocurrencies across almost all blockchains. Additionally, it will also boost the adoption of distributed ledger technology (DLT) blockchains across capital markets. Chainlink co-founder Sergey Nazarov announced the project at the SmartCon 2022 conference being held in New York City.
Bridging The Gap For TradFi and DeFi
With SWIFT gaining access to cross-chain interoperability, the gap between traditional and digital assets in the TradFi sector could be bridged, as SWIFT would now be able to instruct token transfers in every blockchain environment. In addition, financial institutions will benefit tremendously from this pilot project as they would be able to adopt blockchain technology without having to shell out the big bucks in set-up costs and development challenges.
SWIFT’s Bid For TradFi Interoperability
With the demand for interoperability increasing by leaps and bounds in recent months, crypto-native companies and traditional finance investors alike are seeking opportunities to get their fair share of the pie. Speaking at the conference, SWIFT’s Strategy Director Jonathan Ehrenfeld Solé acknowledged the “undeniable interest” that institutional investors are showing towards crypto. TradFi players want to be able to connect across asset classes on one network.
In 2021, SWIFT revealed that it was exploring opportunities to improve the exchange of information between systems interacting during the lifespan of tokenized assets.
Other Projects In The Works
SWIFT had previously teamed up with Chainlink on a successful proof-of-concept concerning bond issuance and redemption. More recently, in May 2022, the financial messaging network teamed up with Capgemini to conduct CBDC-related tests for cross-border crypto payments. Once again, the interbank messaging system was seeking to improve the connectivity of digital assets with each other and with traditional currencies.
On the other hand, in June 2022, Chainlink announced its upcoming staking program for the second half of 2022 and shared the project roadmap, resulting in a four-week record price surge for the native LINK token.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
