SWIFT, or the Society for Worldwide Interbank Financial Telecommunication, is collaborating with blockchain data provider Chainlink to create a proof-of-concept that will enable traditional financial institutions to integrate blockchain technology.
SWIFT is using the Cross-Chain Interoperability Protocol (CCIP) in an initial proof of concept.
— Chainlink (@chainlink) September 28, 2022
CCIP will enable SWIFT messages to instruct on-chain token transfers, helping the SWIFT network become interoperable across all blockchain environments.https://t.co/8GOBNhzwCk pic.twitter.com/Pvm0Cex45e
The two companies are developing a cross-chain interoperability protocol (CCIP) that will enable SWIFT to instruct on-chain token transfers. Chainlink launched the CCIP in August 2021, and it is a global standard for cross-chain messaging, data, and token transfer. As a result, the interbank network will be able to communicate with and transfer cryptocurrency across nearly all blockchains. It will also accelerate the adoption of distributed ledger technology (DLT) blockchains in capital markets. Sergey Nazarov, the co-founder of Chainlink, announced the project at the SmartCon 2022 conference in New York City.
With SWIFT gaining access to cross-chain interoperability, the TradFi sector’s gap between traditional and digital assets may be bridged, as SWIFT will now be able to instruct token transfers in any blockchain environment. Furthermore, financial institutions will benefit greatly from this pilot project because they will be able to adopt blockchain technology without incurring large set-up costs or development challenges.
The demand for interoperability has been skyrocketing in recent months, and crypto-native companies and traditional financial investors alike are looking for ways to get a piece of the action. Speaking at the conference, SWIFT Strategy Director Jonathan Ehrenfeld Solé acknowledged institutional investors’ “undeniable interest” in cryptocurrency. Players in the trade finance industry want to be able to connect across asset classes on a single network.
SWIFT revealed in 2021 that it was looking into ways to improve the exchange of information between systems interacting during the lifetime of tokenized assets.
SWIFT and Chainlink previously collaborated on a successful proof-of-concept for bond issuance and redemption. Recently, the financial messaging network partnered with Capgemini to conduct CBDC-related tests for cross-border crypto payments in May 2022. The interbank messaging system was once again attempting to improve the connectivity of digital assets with one another and with traditional currencies.
Chainlink, on the other hand, announced its upcoming staking program for the second half of 2022 and shared the project roadmap in June 2022, resulting in a four-week record price surge for the native LINK token.
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