SWIFT, the system that powers global financial messages, is looking to evolve into a provider of complete blockchain infrastructure.
This week, the organization revealed its plans to develop a shared ledger. This new platform aims to allow banks to process transactions using stablecoins and other digital assets across various blockchain networks.
While SWIFT has traditionally functioned as a messaging service for international financial transfers, this new platform would position it more centrally in the movement of value.
This marks a significant change for the traditional financial institution, which has been around for over 50 years. It’s known for facilitating communication between more than 11,500 banks, rather than actually moving funds.
SWIFT’s changing role
Noelle Acheson, author of the *Crypto Is Macro Now* newsletter, stated that this development signals a shift in SWIFT’s business approach to address the potential for blockchain to remove intermediaries. She pointed out that SWIFT currently sends messages rather than directly transferring value, whereas blockchain technology combines the message and the transfer into one process.
Acheson suggested that the platform could serve as a connecting layer for digital currencies and tokenized assets, linking previously isolated systems. However, she questions the necessity of SWIFT in a future dominated by programmable money.
“Is SWIFT necessary in a tokenized financial system? Probably not—but it does have existing relationships with almost every bank in the world,” she said.
Onboarding banks to stablecoins
These connections could give SWIFT a significant advantage as banks seek a path into the blockchain-based economy.
Barry O’Sullivan, director of banking and payments at OpenPayd, said the industry is rapidly changing and that traditional banks are being forced to pay attention to the increasing adoption of stablecoins worldwide.
SWIFT has announced that over 30 financial organizations are already participating in the project. O’Sullivan believes that number will increase as demand grows and regulations become clearer. “Adoption, compatibility, and regulatory alignment will require time,” he stated. “However, SWIFT is clearly positioning itself to play a relevant role in the evolution of stablecoins and the tokenized asset market.”
Coinbase’s head of institutional research, David Duong, noted that SWIFT’s platform could also considerably reduce technical hurdles and integration expenses for financial institutions wanting to integrate stablecoins into their operations.
O’Sullivan mentioned that the platform could contribute to standardization within the global stablecoin landscape, despite the likelihood of continued fragmentation. “Existing private stablecoins, central bank digital currencies, and regional solutions will likely continue to operate independently,” he added.
Years in the making
Duong views SWIFT’s initiative as a pivotal moment for both the crypto world and traditional finance, emphasizing that it’s been developing for several years. He said that the company has been exploring distributed ledger technology since 2017, including pilot programs with Chainlink, tokenized securities platforms like Clearstream and SETL, and interoperability tests involving central bank digital currencies. He believes that creating its own shared ledger platform is the next logical step in this long-term transition.
However, some may not consider SWIFT a completely neutral player. Acheson stated that its role in enforcing sanctions has created mistrust in countries whose banks were cut off from the network.
“It’s uncertain whether its offering will stop the payment systems from fragmenting, given the worldwide distrust resulting from SWIFT’s enforcement of U.S. and EU sanctions,” she argued.
Regardless, SWIFT’s decision highlights the increasing convergence of traditional and blockchain-based finance, with the world’s largest financial institutions progressively taking steps to maintain their relevance.