The worldwide financial messaging network, SWIFT, is partnering with Ethereum-focused software company Consensys to build a blockchain-based settlement system.
According to a press release issued Monday, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) is developing this blockchain platform with the involvement of over 30 financial organizations and Consensys. The project will initially concentrate on establishing infrastructure to facilitate “around-the-clock, real-time international payments.”
A primary goal for the novel blockchain solution is compatibility with both “existing and future networks” while adhering to all relevant regulations. Consensys will be responsible for developing a conceptual prototype during the initial stage and establishing subsequent development phases.
“This distributed ledger will extend SWIFT’s current role in financial communication to the digital asset space,” the announcement stated. SWIFT further mentioned that the platform will accommodate the exchange of digital tokens; however, specific token types will be determined by central banks and commercial financial institutions.
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A Fresh Framework for Conventional Finance
Blockchain technology, once viewed as a solution without a clear problem, is now seeing rapid adoption within the traditional financial sector. As indicated in the release, SWIFT’s vision for this innovative infrastructure is to provide “a secure, real-time record of transactions conducted between financial organizations.”
This development holds significance, as SWIFT is the bedrock for a large portion of international payments in the current financial world. According to information available on the organization’s website, more than 11,500 institutions across over 200 countries utilize SWIFT’s infrastructure for transaction processing.
SWIFT doesn’t directly transfer funds; instead, it operates as an interbank messaging system. Its primary purpose is to minimize errors and reduce the risk of fraud. Its widespread presence means that sanctions, or removal from the SWIFT network, can isolate a country or bank from the broader global financial landscape.
According to a report from the US Federal Reserve Bank of New York, “Due to the limited number of SWIFT alternatives, financial sanctions restricting access to the network can be especially burdensome for targeted entities.”
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SWIFT Extends its Blockchain Efforts
This development isn’t SWIFT’s first venture into the blockchain domain. In March of 2024, SWIFT publicly acknowledged the value of tokenization and the shared ledger paradigm. The company envisions an ongoing role for its messaging infrastructure within a financial system based on blockchain technology:
“Shared ledgers are not designed to handle or store large amounts of data effectively due to the data synchronization methods and required computing power. This is where an effective messaging layer becomes essential.”
In November 2024, SWIFT leveraged its global network to facilitate the integration of tokenized fund processes with existing fiat payment infrastructure. The trial was a collaborative effort involving UBS Asset Management and Chainlink, a blockchain oracle network, and was conducted as part of the Monetary Authority of Singapore’s Project Guardian.
Additionally, in late 2024, SWIFT announced that banking institutions in North America, Europe, and Asia would start digital asset trials across its network. These trials are designed to investigate the possibility of providing financial institutions with unified access to “various digital asset classes and digital currencies.”
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