SWIFT Considers Exploring Tokenized Assets In 2022

SWIFT considers exploring tokenized assets in the first quarter of 2021 announcing more plans to venture into the digital asset market next year as we are reading more today in our latest cryptocurrency news.

The global provider of financial messaging services SWIFT considers exploring tokenized assets in an innovative pilot during the first quarter of 2022 that will also lead the provider to explore the interoperability of the tokenization market. Aside from SWIFT, other participants in the initiative will include Northern Trust, Clearstream, Citi-backed SETL, and other players according to the announcement. Thomas Zschach the Chief Innovation Officer of SWIFT said that the organization is able to link more than 11,000 institutions across 200 countries and it is in a good position to engage with the future of tokenized securities:

“We look forward to this set of new experiments and innovating collaboratively with market participants on the emerging trend of tokenized assets.”

The experiments will use the Central Bank Digital Currencies as well as established forms of payments that could include the EUR, US Dollar, and more. Although the market cap of tokenized assets seems small compared to the one of crypto, the market is expected to surge above $24 trillion by 2027. based on this, the interest in the asset class was on an increase as other financial instruments like bonds, stocks, and illiquid assets like commodities were tokenized.

The banks and securities companies are not left out in the tokenization buzz as the entities are responding to the tokenization via a process where fractions of assets are sold as digital tokens and trying to enhance liquidity and accessibility. According to the announcement, the experiment will focus on improving the exchange’s information between the participants in the system as the report shows:

“SWIFT plans a series of experiments in Q1 2022 leveraging its trusted role as a central platform to explore the issuance, delivery versus payment (DVP), and redemption processes to support a frictionless and seamless tokenized asset market.”

SWIFT is a communication platform that connects banks and other financial institutions for cross-border payments. The interest in digital currencies and CBDCs is rising and there are even more suggestions that SWIFT’s relevance could drop in the future. SWIFT’s chairman Yawar Shah said that cryptos are causing a huge change in the global financial space.