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SWIFT to Explore Tokenized Asset Market in 2022

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  • SWIFT  to investigate tokenized asset issuances and redemptions.
  • SWIFT’s promise of quick and frictionless transactions extends to new asset classes as well as classic financial instruments.

SWIFT’s Chief Innovation Officer, Thomas Zschach, stated that the company is ideally positioned to interact closely with the future of tokenized securities since it can link more than 11,000 institutions in 200 countries.

SWIFT is a global supplier of secure financial messaging services that is the preferred method of interbank payments, corporate services, cash management, and compliance in the banking sector. SWIFT also has a strong presence in securities, foreign exchange/treasury, and trade finance.

SWIFT has stated that in Q1 2022, it would perform “a series of tests leveraging its trusted status as a central platform” to investigate its potential value in the nascent industry. SWIFT is looking into methods to “allow and increase interoperability between participants and systems across the transactional lifespan of tokenized assets,” according to the company.

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Tokenized Assets and SWIFT:

SWIFT  to investigate tokenized asset issuances and redemptions, according to the release.

SWIFT plans to conduct experiments in the new year to better understand its position in the tokenized asset arena. 

Tokenized asset adoption has surged significantly, despite the fact that the entire market valuation of tokenized assets is only $2.4 billion at the moment. SWIFT’s major objectives for entering the industry include mainstream acceptance and projected total market size of up to 24 trillion USD by 2027.”

This boosts the asset’s liquidity and accessibility by allowing “a broader demography of individuals to invest in assets that may have previously been unavailable to them,” according to the statement.

SWIFT informs that banks and financial firms are already developing 

fractionalization-related services. Assets are fractionalized to create smaller value tokens. By allowing the use of tokens, financial market infrastructures are also adopting tokenization.

SWIFT’s presence and network make it ideally suited to addressing fragmentation and inefficiency in the market. SWIFT’s worldwide reach and good identity and security frameworks will be critical to its involvement in the tokenized asset arena. SWIFT does not want to become a crypto-custodian, but it does handle both tokenized and regular asset transfers.

SWIFT as an interconnector is being investigated by Clearstream, Northern Trust, SETL, SWIFT, and other industry actors.

SWIFT’s promise of quick and frictionless transactions extends to new asset classes as well as classic financial instruments.

Asset tokenization is a growing trend and a significant problem for financial markets:

Tokenized and conventional assets will “certainly coexist” in the future decade, which “poses possible issues.”A multitude of technologies, platforms, and regulatory frameworks will create a tangle of links for securities market players,

SWIFT is in a good position to help with this problem. They are able to “interconnect market players and streamline operations by performing actions that would otherwise be conducted bilaterally between institutions” as a neutral, multinational cooperative with a keen focus on assuring interoperability and defining standards for the industry.

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