SWIFT, the Belgian-based cooperative that serves as an intermediary and settlement executor of financial transactions between banks worldwide is planning to experiment with asset tokenization in 2022. In a blog post about the subject, SWIFT notes that it will be working with firms like Clearstream, Northern Trust, and SETL to explore “the feasibility and benefits” of using SWIFT as an interconnector to tokenization platforms.
The SWIFT financial intermediary will be used as a tokenization interconnection
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been studying cryptocurrencies and blockchain technology for some time. For example, SWIFT released a report in September 2020, which noted that criminals preferred cash for money laundering rather than using crypto for illicit transactions. More than a year later, SWIFT is still focused on this technology and revealed in a blog post published on December 1 that it is participating in an asset tokenization test in 2022. The announcement states:
Working with Clearstream, Northern Trust, SETL and others, SWIFT plans experiments in Q1 2022 to explore how it can support interoperability in the development of the tokenised asset market.
SWIFT report highlights estimates that crypto assets could reach $ 24 trillion by 2027
SWIFT’s report contains many predictions and information scattered throughout the research. According to some estimates, the organization explains that crypto assets, stablecoins and token assets could reach volumes of around “$ 24 trillion by 2027”. SWIFT understands that tokenized assets can apply to almost anything, and they can also be split. Essentially, tokenized assets can help build liquidity and provide accessibility around the world for those who might not otherwise be able to obtain these types of assets.
“Tokenisation,” SWIFT’s report further notes. “Can be applied to stocks and bonds, but also to illiquid assets, including commodities, property, or even art. For example, a share or bond with a high value per unit (say over $500) can be divided into digital pieces that each have ownership and value. This increases the liquidity of the overall asset, and accessibility, by enabling a wider demographic of people to invest in assets that may historically have been unavailable to them.”
Plans for the first quarter of 2022 will be to research and leverage tokenization for traditional assets, securities and other types of market infrastructure. “SETL and Northern Trust will support SWIFT and the participants in the integration between the various DLT environments and transaction orchestrations using their respective capabilities. The results of the experiments will then be shared with the financial community ”, concludes the SWIFT report. Additionally, Vikesh Patel, Head of Securities Strategy at SWIFT, stressed that the organization wants to create an instant and frictionless system.
“Our vision for instant and frictionless transactions not only applies to traditional securities instruments but also to new asset classes as well,” Patel said in a statement. “The insights from this exercise with leading capital markets participants will help us define and prioritise the concrete steps required to enable seamless processes for tokenised assets.”
