- SWIFT network will launch digital asset trials 2025 across North America, Europe, and Asia.
- SWIFT targets integrating a $30 Trillion tokenized asset market with global financial systems by 2034.
- Ripple’s XRP gains ground as a significant competing player in Cross-Border Payments.
Banks are preparing to test crypto transactions on the SWIFT network as the financial industry increasingly embraces tokenization. Starting in 2025, North American, European, and Asia banks will conduct live bilateral transactions in digital assets on the SWIFT network.
This marks a significant step towards integrating digital currencies and assets into the existing financial systems.
The pilot program will enable international financial institutions to process transactions using the SWIFT network’s current infrastructure. These transactions would involve digital currencies and other assets.
These live trials will demonstrate how organizations can settle transactions with both digital and fiat currencies within SWIFT’s framework.
Over the past few years, SWIFT has explored the feasibility of linking public and private blockchains. The network sought a way to integrate cross-border payments with Central Bank Digital Currencies (CBDCs).
Now, the organization is transitioning from experimental simulations to practical applications.
How SWIFT Wishes to Interlink Traditional And Digital Platforms
These live trials aim to address the fragmentation in digital asset networks that hinder the widespread adoption of digital assets. SWIFT networks’ goal is to create an interconnected system.
This will enable seamless cross-border transactions by integrating traditional and cryptocurrencies through a single gateway.
The trials will allow financial institutions to explore the potential of conducting digital transactions alongside conventional ones.
Additionally, this initiative will unify various platforms. It will ensure that digital currencies are not isolated in ‘digital islands’ but are connected to the mainstream financial systems. This move came when institutional investors were increasingly showing interest in tokenized securities.
Collaborations And Cross-border Payment Solutions
SWIFT is conducting trials to enhance the current cross-border payment system, a crucial area for financial institutions. In 2024, the Hong Kong Monetary Authority and Banque de France tested SWIFT’s foreign exchange solution for wholesale payment systems.
These trials are part of the European Central Bank’s research into new payment technologies. The live tests will examine how ****the SWIFT network can integrate with bank-driven networks like the US Regulated Settlement Network.
This initiative connects traditional financial institutions with emerging digital players. Additionally, SWIFT is involved in Project Agora, a research initiative by the Bank for International Settlements.
This project investigates how tokenized commercial bank deposits and wholesale CBDCs can be integrated into a unified payment system.
Ripple Becoming Greater Competition To SWIFT
Despite SWIFT networks‘s dominance in the cross-border payment market, it faces competition from blockchain-based platforms like Ripple.
According to a report by investment bank Houlihan Lokey, Ripple is seen as a significant competitor to the SWIFT network. This is due to its ability to process transactions more quickly and at a lower cost using its blockchain technology.
Ripple has expanded its reach through partnerships with international payment providers such as Airwallex and Nium.
Ripple’s blockchain technology facilitates faster and cheaper cross-border fund transfers. It bypasses the traditional, time-consuming, and costly intermediaries. This positions Ripple as a key player in a market that handles over $190 trillion in transactions annually.
Platforms like Ripple are gaining attention as the demand for instant cross-border payments grows. There is speculation that SWIFT might eventually adopt XRP, Ripple’s bridge currency, for its network of over 11,500 banks.
Although the SWIFT network has not officially confirmed this, integrating XRP into traditional financial systems could revolutionize global payments.
Disclaimer
In this article, the views, and opinions stated by the author, or any people named are for informational purposes only, and they don’t establish the investment, financial, or any other advice. Trading or investing in cryptocurrency assets comes with a risk of financial loss.