Swift to test solutions interlinking fiat with various tokenized assets

Global financial messaging network Swift said it is building real-world solutions to interlink fiat currencies with different forms of tokenized assets as a part of its vision to offer its users access to existing and emerging asset types.

This setup could enable securities buyers to simultaneously pay for and exchange tokenised assets in real time on our network, Swift noted in a blog post .

“We have a strong track record as a trusted and efficient central platform for transactions using fiat currencies and securities instruments,” Swift said in a Wednesday. “Now we’re further evolving our infrastructure to be able to offer our members the same level of access to emerging digital asset classes and currencies across a range of use cases in payments, securities, FX, trade and beyond.”

Its upcoming plans include testing to enable multi-ledger Delivery-versus-Payment (DvP) and Payment-versus-Payment (PvP) transactions on Swift’s platform. This may offer securities buyers a chance to pay for and exchange tokenized assets in real-time. 

DvP and PvP are different methods of settlement in securities transactions. The former involves completing the delivery of security after the payment is received, while the latter involves payments from the buyer and seller happening simultaneously.

“Without a globally accepted digital form of money, the cash leg in executing DvP settlement is particularly challenging,” Swift said. “So we’re looking at ways to connect tokenized asset settlement with the corresponding payment transfer taking place on the Swift network.”

Swift said the payment leg will first be made using fiat currencies but will later accommodate digital assets such as CBDCs or regulated stablecoins.

Last month, the financial messaging platform announced that it completed a series of experiments demonstrating the potential of blockchain technology for tokenizing assets.

Swift said it worked with Web3 services firm Chainlink as an enterprise abstraction layer to connect its network to the Ethereum Sepolia test network. The experiments demonstrated that Swift could provide one single point of access to multiple blockchain networks, which would support institutions developing tokenized assets.