SWIFT will work alongside Clearstream, Northern Trust, SETL, and others next year to explore how it can support interoperability in the development of the tokenised asset market.

The organisation said that relative to cryptocurrencies and stablecoins, the current market capitalisation of tokenised assets is small but "momentum for these digital assets is expected to accelerate rapidly in the coming years”.

The cooperative society is planning a series of experiments for the first quarter of 2022, when it will explore the issuance, delivery versus payment (DVP), and redemption processes, to support what it describes as a frictionless and seamless tokenised asset market.

These experiments will use both established forms of payment and central bank digital currencies (CBDCs).

“As a neutral cooperative with a reach across 11,000 institutions in more than 200 countries, and oversight by central banks globally, SWIFT is uniquely placed to engage closely in the future of securities,” says Thomas Zschach, chief innovation officer, SWIFT. “We look forward to this set of new experiments and innovating collaboratively with market participants on the emerging trend of tokenised assets.”

SWIFT pointed out that over the coming decade, tokenised and traditional assets will likely co-exist, which could pose potential challenges. One risk is that a variety of technologies, platforms, and regulatory environments will create a “thicket of connections for securities market participants.”

“SWIFT is uniquely placed to help solve this challenge,” it said. “As a neutral, global cooperative with a strong focus on ensuring interoperability and setting standards for the industry, we are able to interconnect market participants and simplify operations by completing activities centrally that otherwise would be performed bilaterally between institutions.

"This role relies on SWIFT’s strong identity and security frameworks, alongside our unparalleled reach and record of reliability.”

Vikesh Patel, head of securities strategy at SWIFT, said that the organisation’s vision for instant and frictionless transactions not only applies to traditional securities instruments but also to new asset classes as well.

“The insights from this exercise with leading capital markets participants will help us define and prioritise the concrete steps required to enable seamless processes for tokenised assets,” added Patel.

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