SWIFT to begin pilot operation of digital asset transactions for banks starting in 2025
3 min readThe Society for Worldwide Interbank Financial Telecommunication (SWIFT) announced that starting in 2025, banks in North America, Europe, and Asia will begin pilot operations of real digital asset transactions on the SWIFT network.
Exciting news! Starting next year, financial institutions from around the world will start trialling live digital asset and currency transactions on the Swift network.
This marks an important milestone in our journey to enable banks to transact interchangeably across both… pic.twitter.com/70BxOMoBpT
— Swift (@swiftcommunity) October 3, 2024
The test aims to evaluate the efficiency of using digital assets for various financial transactions across different ledgers, including payments, foreign exchange transactions, and securities trading.
SWIFT to begin pilot operation of digital asset transactions in 2025
According to a press release by SWIFT on October 3rd, the first phase of the digital asset transaction test will focus on payments, foreign exchange, securities, and trade to support settlement across multiple ledgers.
This experimental phase will measure how efficiently digital assets can be utilized in real-world use cases alongside traditional fiat currencies.
Tom Zschach, Chief Innovation Officer, emphasized the importance of digital assets being seamlessly integrated into the existing financial system for global success.
This test represents SWIFT’s latest achievement in the blockchain space.
Earlier this year, SWIFT participated in Project Agora, a collaborative initiative led by the Bank for International Settlements (BIS) aimed at exploring tokenization technology to address inefficiencies in the current payment system.
Through its participation, SWIFT successfully demonstrated its ability to transfer tokenized value across both public and private blockchains and interconnect global Central Bank Digital Currencies (CBDCs).
Convergence of cryptocurrency adoption and traditional finance
SWIFT’s digital asset transaction test aligns with the broader trend of traditional financial markets embracing digital assets.
In recent months, major financial institutions and platforms have taken a series of steps to integrate cryptocurrency into their services.
For example, PayPal Holdings announced that its U.S. business customers can now buy, hold, and sell cryptocurrency from business accounts. In August, Morgan Stanley, one of the world’s largest asset managers, informed its financial advisors that eligible clients could now invest in BlackRock’s iShares Bitcoin Trust and Fidelity Wise Origin Bitcoin Fund.
Today is a historic day.
Morgan Stanley is among the pre-eminent wealth management firms globally.
Today, they announced that wealth managers can recommend clients own Bitcoin ETPs.
They did the homework. They decided it's important.
The train is leaving the station.
— Hunter Horsley (@HHorsley) August 2, 2024
Additionally, BlackRock launched its first “tokenized fund” earlier this year, allowing investors to invest in U.S. dollar bonds through tokens issued on the Ethereum blockchain.
Most recently, Franklin Templeton expanded its blockchain-based MMF, FOBXX, to Arbitrum, a network designed to make Ethereum transactions more efficient.
Franklin Templeton’s @FTI_DA OnChain U.S. Government Money Fund is now available on Arbitrum!
We’re excited to have access to the BENJI platform and see a major financial institution, Franklin Templeton, build on Arbitrum!https://t.co/CRWCFyz3NM pic.twitter.com/yrlwflYOow
— Arbitrum (💙,🧡) (@arbitrum) August 8, 2024
Traditional banking giants like PayPal and Mastercard are also actively exploring digital assets. PayPal has launched its own stablecoin, PYUSD, pegged to the U.S. dollar, while Mastercard is collaborating with JPMorgan and Citibank to explore tokenized asset settlements for cross-border transactions.
