Two of the biggest cogs in the global payment machine have announced separate statements showing how blockchain and stablecoin technology is increasingly being integrated into the worldwide banking sector.
SWIFT (or the Society for Worldwide Interbank Financial Telecommunication), which standardised how financial institutions worldwide send and receive transactions, announced that global banks will begin conducting live trials of digital asset and currency transactions in 2025.
“The trials follow groundbreaking collaborative work with dozens of financial institutions that have demonstrated Swift’s ability to connect multiple digital networks, technologies and asset classes,” said the group.
Swift said it has figured out how to transfer “tokenised value” across public and private blockchain.
Usually synonymous with cryptocurrencies like bitcoin and ether, blockchain technology works as a form of distributed ledger technology (DLT) in which transactional data is logged with a decentralised network of computers (known as 'nodes' in blockchain parlance).
This network performs 'consensus' on this transactional data, with a majority of nodes needing to approve a transaction before it is executed.
This technology removes the need for a bank or other financial institution to facilitate the transactions.
It has emerged as the basis for thousands of legitimate and illegitimate cryptocurrency projects, but mainstream institutions have long pondered its utility in traditional finance.
Key use cases cited by Swift include payments, foreign exchange, securities and trade.
These trials are expected to provide banks with a single access point to manage multiple digital asset classes, allowing them to handle transactions alongside traditional currencies.
“For digital assets and currencies to succeed on a global scale, they need to coexist seamlessly with traditional forms of money. With Swift’s vast global reach, we are uniquely positioned to bridge emerging and established forms of value,” said Swift’s chief innovation officer Tom Zschach.
Visa Inc (NYSE:V, ETR:3V64) is also playing a key role in this push.
The company’s new Visa Tokenized Asset Platform (VTAP) intends to help banks to issue and transfer fiat-backed tokens over blockchain networks.
Visa has its own in-house blockchain development team working on the project.
Proponents of blockchain technology as an alternative form of finance worry that this institutional adoption – and the spectre of central bank digital currencies (CBDCs) – flies in the face of blockchain’s founding principle of decentralisation.