SWIFT tie-ups with Chainlink to develop a cross-chain crypto transfer project

    29 Sep 2022

    Interbank messaging service SWIFT has partnered with Chainlink Labs (LINK) for a cross-chain interoperability proof-of-concept project. The project would connect SWIFT’s network to every blockchain to allow traditional finance players access to digital and traditional assets within the single network.

    The link-up was announced at an event in New York on Sept. 28. At the panel, SWIFT strategy director Jonathan Ehrenfeld Solé and Chainlink co-founder Sergey Nazarov framed the project with a focus on the difficulties in bridging the worlds of traditional and decentralized finance.

    According to Nazarov, the proof-of-concept (PoC) involves Chainlink’s Cross-Chain Interoperability Protocol (CCIP), allowing SWIFT messages to instruct token transfers across nearly every blockchain network, which will accelerate the adoption 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 around the world. 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 been exploring blockchain and DLT technology and central bank digital currencies (CBDCs) to facilitate faster payments. Last year, the messaging network operator announced a bid to test the tokenization of real-world assets, and the Chainlink Labs partnership is in line with that pathway.

    On the other side, Chainlink added this collaboration with SWIFT allows financial institutions to gain blockchain capability without replacing, developing, and integrating new connectivity into legacy systems, something it said would require substantial modifications with an “exceptionally high” cost.

    Cross-chain capabilities have been the focus of numerous projects since 2021, with development teams focused on developing secure ways to move assets from one chain to the next. However, cross-chain mechanisms appeared to be a significant security challenge, with so-called bridges being often targeted by hackers and code exploiters.

    Leave a Reply

    Your email address will not be published. Required fields are marked *