Swift develops blockchain-based payment solution to enable real-time trading of tokenized assets

On 11 September, Swift, the Society for Worldwide Interbank Financial Telecommunication, announced the development of a new payment solution aimed at allowing users to access regulated digital assets and conduct cryptocurrency transactions through its existing network. This marks a significant step in the evolution of digital finance, with Swift recognising the increasing interest in digital assets over the past two years.

Blockchain-Based Systems for Enhanced Efficiency

As part of its initiative, Swift is testing two new blockchain-based transfer systems: the multi-ledger Delivery-versus-Payment (DvP) and the multi-ledger Payment-versus-Payment (PvP) systems. Both mechanisms are designed to facilitate cross-chain interoperability, with the DvP focusing on the settlement of tokenised securities or commodities, while the PvP system will target international wire transfers. These developments could potentially reduce settlement times for cross-border transactions from two days to as little as 15 minutes.

Swift's vision is to allow its members to leverage their existing Swift infrastructure to enable transactions using both traditional and emerging digital assets. According to Swift, "We are paving the way for solutions that can link various digital assets and currencies, including exploring how to enable multi-ledger DvP and PvP payment transactions on Swift's secure global platform."

Towards a Tokenised Future

The ultimate goal of these developments is to allow customers to seamlessly access tokenised assets through Swift’s network, enabling instant cross-border payments and settlements. As Swift further refines its infrastructure, it aims to offer access to emerging digital asset classes, including Central Bank Digital Currencies (CBDCs) and regulated stablecoins, alongside traditional fiat currencies.

In the early stages, settlements will use fiat currencies, but the system will eventually evolve to include CBDCs, tokenised commercial bank money, and regulated stablecoins. "This work will initially use fiat currency, but we plan to evolve towards CBDCs, tokenised commercial bank money, and regulated stablecoins," Swift stated.

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Real-World Assets (RWA) as a Priority

Swift has also identified real-world assets (RWA) as a focal point, with the sector expected to reach a market value of $30 trillion by 2034. The growing tokenisation of assets presents a challenge due to interoperability issues, which Swift aims to address through its new systems. The absence of a globally recognised digital currency form has contributed to fragmented digital ecosystems, creating "digital islands."

Tom Zschach, Swift's Chief Innovation Officer, commented: "Digital currencies and tokenisation have immense potential to shape the future of payments and investments. However, this potential can only be realised if the various methods being explored are able to connect and work together."

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Conclusion

Swift’s blockchain-based solutions demonstrate its commitment to modernising global financial infrastructure and addressing the challenges associated with tokenised assets and cross-border transactions. However, regulatory hurdles remain, and the success of Swift’s ambitions will largely depend on how quickly these regulatory and technical challenges can be resolved.