North American, European, and Asian Banks to Participate in SWIFT Digital Asset Trials in 2025

SWIFT Announces Digital Asset Trials

In a recent announcement, the Society for Worldwide Interbank Financial Telecommunication (SWIFT) revealed that banks from North America, Europe, and Asia are set to participate in digital asset trials on its network in 2025. These trials will involve transactions that include multiple digital currencies and assets. The goal of these trials is to investigate how the banking network can offer financial institutions unified access to a variety of digital asset classes and currencies. The initial use cases will focus on payments, foreign exchange, securities, and trade, with the aim of enabling multi-ledger delivery-versus-payment and payment-versus-payment transactions.

Addressing the Fragmented Digital Asset Landscape

SWIFT pointed out the rapid growth of unconnected platforms and technologies in the digital asset economy, leading to an increasingly fragmented landscape. According to SWIFT, this fragmentation poses significant barriers to global adoption as it creates a complex web of 'digital islands'. The trials will leverage SWIFT's unique position to interlink these disparate networks with each other and with existing fiat currencies. This will enable its global community to seamlessly transact using digital assets and currencies alongside traditional forms of value.

SWIFT's Vision for All Kinds of Assets

Tom Zschach, SWIFT's chief innovation officer, stated that the organization is focused on developing real-world mainstream applications to bridge emerging and established forms of value. He also emphasized SWIFT's intention to seamlessly make and track transactions of all kinds of assets. For digital assets and currencies to succeed on a global scale, Zschach noted, it's critical that they can seamlessly coexist with traditional forms of money. However, SWIFT has not commented on which digital assets are likely to be part of its blockchain trials in 2025 and when it expects to launch those trials.

SWIFT's Ongoing Blockchain Experiments

The upcoming digital currency trials on SWIFT are another blockchain-related development by the global banking network, which was founded in the 1970s. In September 2024, SWIFT joined the Bank for International Settlements and a group of central banks in the tokenization Project Agorá. The project aims to identify how tokenized commercial bank deposits can be integrated with tokenized wholesale central bank digital currencies (CBDCs) on a single platform. In March 2024, SWIFT proposed creating a blockchain-based 'state machine', a dynamic model that reflects the current state of transactions and balances across institutions. Last year, SWIFT issued a report on potential methods of connecting diverse blockchains to solve the issue of cross-chain interoperability.

Bottom Line

The move by SWIFT to conduct digital asset trials is a significant step towards integrating digital currencies into the mainstream financial landscape. It also highlights the growing recognition of the potential of digital assets and currencies. However, the success of these trials and the eventual widespread adoption of digital assets will depend on the ability to seamlessly integrate these new forms of value with traditional forms of money. What are your thoughts on this development? Do you think it will pave the way for a more unified digital asset landscape? Share your thoughts and discuss with your friends. Remember, you can sign up for the Daily Briefing, which is delivered every day at 6pm.