Global financial message service provider Swift announced its strategic partnership with asset manager UBS and Chainlink, a decentralized blockchain oracle network, earlier on Tuesday, noting that the firms have one joint mission: to enable companies to process off-chain cash settlements for tokenized funds on the Swift platform.
Swift’s New Pilot
The three companies have introduced a new pilot for settling tokenized fund subscriptions and redemptions on the Swift network.
According to Swift’s latest press release, the pilot has been launched as a part of the Monetary Authority of Singapore’s (MAS) Project Guardian, which facilitates liquidity and efficiency in financial markets through asset tokenization.
The pilot connects digital assets to fiat payment systems across borders, covering an extensive network of over 11,500 financial institutions across 200 countries and territories.
“For digital assets to be adopted globally, they must seamlessly integrate with both existing payment systems and digital currencies,” said Jonathan Ehrenfeld, Head of Strategy at Swift.
Why Introduce a New Pilot?
Traditional funds constantly suffer from various shortcomings, including manual errors, a lack of transparency, and delayed payment settlements. These have led to increased operation costs, decreased liquidity, and missed investment opportunities.
The new pilot, aimed at addressing these gaps, is designed to automate fund transaction lifecycles, promising a significant boost in efficiency by reducing errors that would have been incurred through manual operations.
According to Swift, the pilot will enable many financial institutions to leverage blockchain technology via the Chainlink platform and Swift network to settle subscriptions and redemptions for tokenized investment fund vehicles without each company adopting an on-chain payment process.
Previously, Swift’s infrastructure directly connected financial institutions to various blockchains. However, its latest pilot with Chainlink enables the automatic minting and burning of UBS tokenized fund tokens for customers and investors. At the same time, Chainlink processes interactions between parties by fulfilling various conditions for seamless transactions.
Commenting on the partnership, Sergey Nazarov, Co-Founder of Chainlink, said,
“Chainlink is enabling institutions to reuse Swift’s infrastructure to facilitate payments for digital asset transactions. I am very excited by the upcoming adoption of these off-chain payment capabilities and how they will increase the flow of capital and expand the possible user base of digital assets.”
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