Securities finance latest news | Swift completes tokenised asset blockchain transfer experiments

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Following recent experiments, Swift has found that its infrastructure can facilitate the global transfer of tokenised assets over both public and private blockchains.

These results could help to slow the growth of tokenised asset markets, allowing them to scale globally as they mature, the organisation says.

A major challenge for investors and institutions interested in tokenisation is the use of various incompatible blockchains with different functionalities and liquidity profiles. This increases operational costs and difficulties, as financial institutions must build connections to individual platforms.

Swift’s experiments, conducted in partnership with a number of major financial institutions, securely connected the Swift network to the Ethereum Sepolia network. Web3 services provider Chainlink provided the enterprise abstraction layer, while its Cross-Chain Interoperability Protocol enabled interoperability between the source and destination blockchains.

In total, transfers of simulated tokenised assets took place between two wallets on the same public distributed ledger technology network, between two wallets on different public blockchains, and between a public and private blockchain.

The technical and business requirements for interacting with both business and public blockchains were also taken into account, and a potential blockchain interoperability protocol was considered to ensure the secure transfer of data between existing systems and any number of blockchains was considered.

Design and technical elements of a solution were discussed, along with data privacy, governance, operational risk and legal liability issues.

The experiments form part of Swift’s strategy to provide secure, global interoperability as new technologies and platforms emerge. In recent years, Swift has proved its infrastructure to be able to connect digital assets with existing payments systems.

Looking forward, Swift assures that it will continue to work with the industry to understand tokenised asset adoption use cases and prioritise its efforts accordingly.

Tom Zschach, chief innovation officer at Swift, says: “For tokenisation to reach its potential, institutions will need to be able to seamlessly connect with the whole financial ecosystem. Our experiments have demonstrated that existing secure and trusted Swift infrastructure can provide that central point of connectivity, removing a hurdle in the development of tokenisation and unlocking its potential.”

Jennifer Peve, managing director and global head of strategy and innovation at DTCC, comments: “As a financial market infrastructure provider, DTCC is committed to co-ideating and developing solutions to connect the broadest set of market participants and ensure that innovative solutions don’t form in silos and deliver maximum value.

“We are pleased to engage with Swift on this important experiment that has taken meaningful steps in understanding what cross-network interoperability could mean in the future.”

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