SWIFT to Launch Live Trials of Digital Asset Transactions with Banks in 2025

SWIFT to Launch Live Trials of Digital Asset Transactions with Banks in 2025

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has announced that banks across North America, Europe, and Asia will begin live trials of digital asset transactions on its network by 2025. This initiative aims to evaluate the effectiveness of utilizing digital assets for various financial operations, including payments, foreign exchange, securities, and trade.

According to a press release issued by SWIFT on October 3, the first phase of these trials will focus on testing payments, foreign exchange, and securities across multiple ledgers. The goal of this experimental phase is to assess the practical application of digital assets alongside traditional currencies in real-world financial transactions.

Tom Zschach, SWIFT's Chief Innovation Officer, highlighted the significance of ensuring a smooth integration of digital currencies with existing financial systems to facilitate their global adoption. This trial represents SWIFT's ongoing commitment to blockchain innovation within the global banking sector.

Earlier in the year, SWIFT participated in Project Agorá, a collaboration with the Bank for International Settlements (BIS) aimed at exploring tokenization to address inefficiencies in the current payment landscape. Through this project, SWIFT successfully demonstrated the ability to transfer tokenized value across both public and private blockchains and link central bank digital currencies (CBDCs) on a global scale.

The launch of SWIFT's digital asset trials aligns with a broader trend in traditional finance embracing the integration of digital assets. Major financial institutions and platforms have been increasingly moving towards incorporating cryptocurrencies into their offerings. For instance, PayPal Holdings recently announced that U.S. merchants will now be able to buy, hold, and sell cryptocurrencies from their business accounts.

In August, Morgan Stanley informed its financial advisors that eligible clients could now invest in shares of BlackRock's iShares Bitcoin Trust and Fidelity's Wise Origin Bitcoin Fund. Furthermore, BlackRock unveiled its first tokenized fund earlier this year, providing investors access to U.S. dollar yields via a token issued on the Ethereum blockchain.

Additionally, Franklin Templeton expanded its blockchain-based money market fund, FOBXX, to Arbitrum, a network optimized for processing Ethereum transactions more efficiently. Traditional banking giants like PayPal and Mastercard are also exploring digital asset opportunities, with PayPal launching its own stablecoin, PYUSD, which is backed by U.S. dollars, and Mastercard collaborating with JPMorgan and Citibank on tokenized asset settlements for cross-border transactions.