SWIFT is a Belgian cooperative which acts as an intermediary for and settlement executor in financial transactions among banks around the world. It plans to try asset tokenization by 2022. In a blog post about the subject, SWIFT notes that it will be working with firms like Clearstream, Northern Trust, and SETL to explore “the feasibility and benefits” of using SWIFT as an interconnector to tokenization platforms.
As a tokenization interconnector, Financial Intermediary SWIFT will be used
For a long time, SWIFT has been researching cryptocurrencies as well as blockchain technology. SWIFT, for instance, published in September 2020 a report that stated criminals prefer to use crypto for illegal transactions, while cash is preferred for money laundering. SWIFT still has its eyes on the technology a year later and announced in a December 1 blog post that it will be participating in an asset tokenization test in 2022. It states that:
Clearstream, Northern Trust and SETL are among the partners SWIFT is collaborating to plan experiments for Q1 2022 in order to see how they can help support interoperability during the development of the tokenised assets market.
SWIFT’s Report Highlights Estimates That Say Crypto Assets Could Grow to $24 Trillion by 2027
SWIFT’s report has a lot of predictions and insights strewn throughout the research. The organization explains by some estimates, crypto assets, stablecoins, and tokenized assets could swell to volumes of around “24 trillion USD by 2027.” SWIFT understands that tokenized assets can apply to nearly anything and they can be fractionalized as well. Tokenized assets, in essence, can increase liquidity and make these assets more accessible to people around the world who might not otherwise be able to access them.
“Tokenisation,” SWIFT’s report further notes. “Can be applied to stocks and bonds, but also to illiquid assets, including commodities, property, or even art. A share of a bond or stock with high values per unit, such as $500 can be broken down into digital parts that have their own ownership and value. This increases the liquidity of the overall asset, and accessibility, by enabling a wider demographic of people to invest in assets that may historically have been unavailable to them.”
Plans for Q1 2022 will include researching and leveraging tokenization to traditional assets, securities and other market infrastructures. “SETL and Northern Trust will support SWIFT and the participants in the integration between the various DLT environments and with transaction orchestrations using their respective capabilities. Results of the experiments will be shared with the financial community afterward,” SWIFT’s report concludes. Vikesh Patel (head of Securities Strategy at SWIFT) stated that SWIFT wants to establish an immediate and seamless system.
“Our vision for instant and frictionless transactions not only applies to traditional securities instruments but also to new asset classes as well,” Patel said in a statement. “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.”
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