Swift can facilitate tokenised asset transfers between different blockchains, new experiments confirm
Swift has conducted a series of experiments that successfully transferred tokenised assets between different public and business blockchains through a single point of entry.
The experiments sought to overcome the challenges of interoperability faced by investors and financial institutions trading on different blockchains with varying liquidity profiles and functions.
This group have previously needed to build and instate connections between blockchains, but the experiments have now shown that this can be completed with Swift’s existing infrastructure.
In collaboration with several major financial institutions, including BNY Mellon, Citi and Euroclear, Swift conducted three different types of transfers using simulated tokenised assets.
These included transferring assets from one wallet to another with both using the same distributed ledger technology (DLT) network; between a public and private blockchain; and between two wallets using different public blockchains.
Swift’s network connected to the Ethereum Sepolia network with Chainlink serving as an enterprise abstraction layer, while interoperability between source and destination blockchains was achieved with Chainlink’s cross-chain interoperability protocol (CCIP).
The experiments specifically sought to uncover the technical and design demands of inter-blockchain relations and the role of an interoperability protocol in securing the compliant transfer of data. For this reason, areas of data privacy, legal liability and operational risk were also considered.
In publishing the results, Swift recognised the “potential to remove significant friction slowing the growth of tokenised asset markets and enable them to scale globally as they mature”.
For this potential to be realised, Tom Zschach, chief innovation officer at Swift, emphasises that institutions must “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 are in line with Swift’s ongoing efforts to connect digital assets to existing payment systems through its infrastructure, and follow its previously successful experiments with central bank digital currencies (CBDCs) last year.