Swift’s new blockchain-based ledger is now ready for live payments, but banks still require their own digital asset infrastructure before they can connect to it, as noted by Lamine Brahimi, co-founder and managing partner of Taurus, a custody and tokenization firm.
“To connect to the Swift ledger today, you need three essential components,” Brahimi explained in an interview with CoinDesk. “You must have your own permissioned ledger that can interact with Swift’s ledger, possess wallet capabilities, and also incorporate tokenization and smart contract capabilities to seamlessly integrate with Swift’s smart contracts.”
This means that Swift’s ledger serves as a substitute for a bank’s internal systems. It acts as an orchestration layer that facilitates institutions in transferring tokenized deposits across borders 24/7, while the final settlement process continues through existing channels. Banks still need to have the necessary systems in place to handle and oversee tokenized deposits, digital asset wallets, and smart contracts utilized in this operation.
In July, Swift announced that 17 banks were gearing up for live tokenized deposit transactions, marking its initial step towards modernizing its bank messaging system that has been a staple in the traditional financial industry since the 1970s. Currently, Swift still manages money transfers amounting to $1.5 quadrillion annually.