SWIFT Completes Tokenized Assets Experiment with Northern Trust and SETL

UTC by Bhushan Akolkar · 2 min read
SWIFT Completes Tokenized Assets Experiment with Northern Trust and SETL
Photo: Depositphotos

SWIFT and its partners are testing the tokenized asset market with a focus on interconnecting market participants, ensuring interoperability, and simplifying their operations by completing activities centrally. 

SWIFT, the world’s leading cross-border payments technology, announced that it has successfully completed the blockchain pilot for tokenized assets with Northern Trust, Clearstream, and SETL.

These partners collaborated last December to investigate the development of tokenized asset market. The goal is to focus on interconnecting market participants, ensuring interoperability, and simplifying their operations by completing activities centrally.

As a result, the partners conducted a series of experiments on delivery vs payment, issuance, and redemption process for supporting a frictionless and seamless tokenized asset market. It linked the tokenized system between global custodians and central securities depositories (CSDs). Besides, the settlement was executed both conventionally as well as with central bank digital currency (CBDC). Speaking about this development, Vikesh Patel, SWIFT Head of Securities Strategy said:

“Our vision for instant and frictionless transactions not only applies to traditional securities instruments but also to new asset classes as well. The insights from this exercise with leading capital markets participants will help us define and prioritise the concrete steps required to enable seamless processes for tokenised assets.”

SWIFT: Tokenized Assets

As said, SWIFT is currently the largest facilitator of cross-border payments across the globe. Thus, it also wants to create a common interface to enable the tokenization of assets.

There have been numerous tokenization platforms. However, the risk has been that each platform becomes a new silo of assets. Practically, investors and asset managers don’t like integrating with numerous different platforms. This would mean more friction.

Thus, SWIFT is working on an interoperability solution. Recently, SWIFT joined hands with price feeds provider Chainlink on a Proof-of-Concept project. SWIFT will be leveraging Chainlink’s Cross-Chain Interoperability Protocol (CCIP) allowing SWIFT messages to instruct token transfers across every blockchain network.

In the recent experiment of tokenizing assets, SETL worked along with SWIFT to test the integration between various DLT environments. Speaking on this, Marjan Delatinne, head, payments, SETL, said:

“We are entering a pivotal moment of history by connecting the dots between Swift and the new tokenized world. This experiment could lay the foundation for universal interoperability between participants and systems during the transactional lifecycle of tokenised assets.”

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Bhushan Akolkar

Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.

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