Swift, Chainlink Tokenization Experiment Successfully Transfers Value Across Multiple Blockchains

The interbank messaging system Swift announced in June it was collaborating with Chainlink and dozens of financial institutions to test connecting blockchains.

AccessTimeIconAug 31, 2023 at 10:06 a.m. UTC
Updated Aug 31, 2023 at 1:44 p.m. UTC

Interbank messaging system Swift and Web3 services platform Chainlink have successfully transferred tokenized value across multiple private and public blockchains in recent experiments, a Thursday press release said.

"The findings have potential to remove significant friction slowing the growth of tokenized asset markets and enable them to scale globally as they mature," the press release said.

In June Chainlink and Swift announced that they would be collaborating with dozens of financial institutions to test how they can connect with multiple blockchain networks. BNP Paribas, BNY Mellon, The Depository Trust & Clearing Corporation and Lloyds Banking Group and others collaborated with Swift on the experiments.

Financial institutions around the world are increasingly experimenting with asset tokenization with the goal of improving financial markets. A recent report from the Hong Kong Monetary Authority said tokenization could help improve efficiency and transparency in bond markets.

"For tokenization to reach its potential, institutions will need to 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 tokenization and unlocking its potential," Tom Zschach, chief innovation officer at Swift said in a press statement.

Swift used Chainlink's Cross-Chain Interoperability Protocol (CCIP) to connect with different blockchains. Chainlink’s CCIP, which is designed to help build cross-chain applications and services, went live in July.

A report on the Chainlink and Swift experiments emphasized the need for regulatory clarity on tokenization and said that future work will require a greater focus on data privacy.

UPDATE (Aug. 31, 13:44 UTC): Adds detail from report in last paragraph.

Edited by Sandali Handagama.


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Camomile Shumba

Camomile Shumba is a CoinDesk regulatory reporter based in the UK. She previously worked as an intern for Business Insider and Bloomberg News. She does not currently hold value in any digital currencies or projects.