SWIFT partners with Chainlink for cross-chain crypto transfer project
Interbank messaging system SWIFT has partnered with price oracle provider Chainlink to work on a proof-of-concept (PoC) project that will give traditional financial firms the ability to trade across blockchain networks.
Chainlink co-founder Sergey Nazarov announced the project at its SmartCon 2022 conference in New York on September 28 alongside SWIFT strategy director Jonathan Ehrenfeld Solé.
SWIFT uses the Cross-Chain Interoperability Protocol (CCIP) in a first proof of concept.
CCIP will enable SWIFT messages to instruct on-chain token transfers, helping the SWIFT network become interoperable across all blockchain environments. pic.twitter.com/Pvm0Cex45e
— Chainlink (@chainlink) 28 September 2022
At the conference, Solé said there is “undeniable interest from institutional investors in digital assets,” adding that these traditional financial players want access to digital and traditional assets on one platform.
PoC uses Chainlink’s cross-chain interoperability protocol (CCIP), which allows SWIFT messages to instruct token transfers across almost any blockchain network, which, according to Nazarov, will accelerate the use of distributed ledger technology (DLT) blockchains across capital markets and traditional finance. .
The SWIFT interbank messaging system is the most widely used platform for traditional cross-border fiat transactions, connecting over 11,000 banks worldwide. In August, the system recorded an average of 44.8 million messages per day.
However, transactions on SWIFT’s network can take several days to complete. The company has explored blockchain and DLT technology and central bank digital currencies (CBDC) to facilitate faster payments.
Chainlink added that this collaboration with SWIFT allows financial institutions to gain blockchain capability without replacing, developing and integrating new connectivity into legacy systems, which it said would require significant modifications at an “exceptionally high” cost.
Related: Why interoperability is key to blockchain technology’s mass adoption
Mastercard CEO Michael Miebach said at a May panel session on CBDCs that he does not expect SWIFT to exist in five years, likely due to the increasing competition from CBDCs for cross-border payments and settlements.
Mastercard later retracted the statement, noting that Miebach simply believed that SWIFT’s business will continue to evolve from its current form.
