- Swift, the interbank messaging system, and Chainlink, the leading Web3 service platform, collaborate to test connections between major financial institutions and multiple blockchain networks.
- This partnership aims to explore how blockchain technology can introduce efficiency, reduce costs, and increase liquidity, marking a significant milestone for both traditional finance and the crypto industry.
A Groundbreaking Collaboration: Swift and Chainlink
In the realm of decentralized finance, a groundbreaking experiment is unfolding. Swift, the internationally recognized interbank messaging system, is joining forces with Chainlink, a reputable provider of real-world data to blockchains. This collaboration intends to bridge the gap between traditional finance and the cryptosphere, specifically, enabling seamless connections between dozens of financial institutions and multiple blockchain networks.
1/ Swift recently announced a collaboration with #Chainlink and 12+ of the largest financial institutions and FMIs in the world around using CCIP to enable connectivity with and interoperability between public/private blockchains
Who are these participants? 🧵👇 pic.twitter.com/nORAqof3wt
— ChainLinkGod.eth (@ChainLinkGod) July 23, 2023
These experiments will involve notable financial market entities such as the Depository Trust and Clearing Corporation (DTCC), Australia and New Zealand Banking Group Limited (ANZ), BNP Paribas, BNY Mellon, Citi, Clearstream, Euroclear, and Lloyds Banking Group. The aim is to scrutinize the feasibility of these institutions utilizing Swift’s infrastructure to facilitate the transfer of tokenized assets across various blockchains.
Chainlink: Powering Interoperability across Blockchains
For these pioneering tests, Chainlink will provide critical connectivity across both public and private blockchains. The partnership between Swift and Chainlink, first unveiled at Chainlink’s annual conference, SmartCon, represents a monumental stride towards blockchain interoperability.
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In the capital markets, there is an escalating consensus that blockchain technology holds the potential to introduce unprecedented efficiencies, cost reductions, and simplification of settlement processes. This could attract a more extensive investor base into the private markets, and by extension, increase liquidity.
The Future of Finance: Banks and Blockchains
The crypto industry co-founder of Chainlink, Sergey Nazarov, asserts that this move holds significance not just for financial institutions, but also for the cryptocurrency sector. Nazarov highlights that banks currently hold the most significant portion of global capital. For the crypto industry to grow past the single digit trillions, it is paramount for the banks to get involved. According to Nazarov, the blockchain industry will grow past $10 trillion due to banks and their clients, a significant leap from the current overall crypto market capitalization, which stands at $1.08 trillion.
Swift’s exploration of blockchain interoperability aims to eliminate friction from tokenized asset settlement. This process requires overcoming fragmentation, a challenge for institutional investors seeking to invest in tokenized assets. The growing diversity of blockchain networks, each with its unique functionality or liquidity profile, generates substantial overhead and friction in managing and trading these assets. The Swift and Chainlink initiative could be the key to the long-term scalability of the market by developing an interoperability model that would enable global access to different platforms.
This sophisticated endeavor builds on a series of successful trials in 2022 and will further explore how the industry could address potential operational and regulatory pitfalls when operating in a blockchain environment. Swift is uniquely placed to help the financial community overcome this challenge by demonstrating how existing infrastructure can be used as a single access point to multiple tokenization platforms. Through these experiments, Swift and Chainlink will help advance the industry’s understanding about the technical and business requirements when interacting with and between multiple blockchain networks.
The ultimate goal is to unlock the potential value of using a blockchain interoperability protocol to securely transfer data and value between legacy systems and an unlimited number of blockchains.
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