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SWIFT, the global interbank cooperative society, will allow over 11 thousand financial institutions to conduct digital asset transactions over its network next year.
Industry experts described both the opportunities and challenges for the project in exclusive interviews with BeInCrypto.
SWIFT’s Global Interbank Asset Trials
SWIFT, the global interbank cooperative society, announced a new initiative to take place across North America, Europe, and Asia next year. When live trials begin, participating banks will be able to use the SWIFT network to carry out digital asset transactions. This program comes after various experiments to determine the workability of this system internationally.
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SWIFT considers this program a milestone innovation in its long-term project: creating a single point of access between the financial sector and digital asset classes. This certainly isn’t its first attempt at such a project, as SWIFT conducted international CBDC trials earlier this year. David Pinger, CEO and co-founder at Warden Protocol described the breakthrough of this project in an exclusive interview.
“Connecting traditional financial systems with decentralized platforms will accelerate the adoption of tokenized assets by providing a major inflow of capital from traditional finance. It will also act as a catalyst for tokenization, closing the gap for institutional investors, making digital assets conceptually easier to integrate into existing systems,” said Pinger.
Pinger also listed a few major challenges to such an ambitious project: regulatory inconsistencies, privacy concerns, cross-chain interoperability, etc. SWIFT has anticipated these problems for years, however, and it has already been working on solutions. SWIFT claims that disconnected digital platforms, or “digital islands,” will be its key concern moving forward.
To address this concern, SWIFT focuses on building the largest and most comprehensive banking network possible. The press release even mentions efforts to integrate other emerging bank-led networks into SWIFT’s digital asset plan. Will Wendt, Head of Ecosystem at Oasis Protocol, also gave an exclusive interview with BeInCrypto to discuss the advantages of banks.
“I believe SWIFT’s initiative will bring us closer to achieving Web3’s confidentiality goals. Currently, Web3 networks… are transparent regarding payments, allowing anyone to view wallet addresses and transaction histories. This level of transparency may not align with the needs of traditional banks that rely on SWIFT,” he claimed.
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In essence, one of the biggest regulatory hurdles for a global banking system is quite simple: the need for privacy. Customers’ sensitive financial information must remain confidential, and Wendt claimed that SWIFT’s background is ideal for meeting this need. Creating a seamless user experience will be essential, he said, when tackling these problems.
SWIFT plans to roll this trial program out to over 11 thousand financial institutions next year. The company seemed quite confident in its ability to connect these banks to both “existing and emerging asset types,” but it didn’t mention any specific examples. If successful, this initiative could prove truly game-changing.