On June 6th, 2023 Swift, the global member-owned cooperative and the world’s leading provider of secure financial/bank messaging services, announced that it will be working with crypto company Chainlink (LINK) in an effort to “test how institutions can use their Swift connection to seamlessly interoperate with the multitude of blockchain networks emerging around the world.” This comes as a result of institutional investors seeking to evolve in this new landscape of asset tokenization and the challenges being encountered while doing so.
The new age of digital assets presents a challenge for institutions due to the various blockchains in which these assets are tracked and the lack of interoperability between the chains. The diverse mechanisms of each blockchain and its liquidity profile create the dilemma Swift is aiming to address alongside Chainlink.
In case you are not familiar with Chainlink (LINK), I will give a brief synopsis of their model and purpose. Chainlink is a cryptocurrency that performs as a blockchain oracle. “Blockchain oracles are entities that connect blockchains to external systems, thereby enabling smart contracts to execute based upon inputs and outputs from the real world.”
“Oracles enable connectivity between blockchains and real-world data by interfacing with external APIs and data feeds, allowing them to pull data for or push data from a smart contract.”
“There’s unlikely to be a single prevailing blockchain network,” said Tom Zschach, Chief Innovation Officer at Swift. “We would expect to see a multitude of different platforms emerging, each serving different customer segments with their own bespoke capabilities and requirements. In such a highly fragmented ecosystem, it would simply not be feasible for financial institutions to connect to each and every platform individually. That’s why the community is working with Swift to develop an interoperability model that would enable access to different platforms globally.”
“In a new set of experiments, we will collaborate with more than a dozen major financial institutions and FMIs including 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) – to test how firms can leverage their existing Swift infrastructure to efficiently instruct the transfer of tokenised value over a range of public and private blockchain networks. Chainlink, a leading Web3 services platform, will provide connectivity across public and private blockchains for these experiments'', Swift stated.
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