Financial service provider SWIFT is to be used as a tokenization interconnector
The Society for Worldwide Interbank Financial Telecommunication (SWIFT) has been dealing with cryptocurrencies and blockchain technology for some time. In September 2020, for example, SWIFT published a report that found that criminals prefer cash for money laundering, as opposed to using cryptocurrencies for illegal transactions. More than a year later, SWIFT is still focused on this technology, announcing in a blog post published December 1 that it will be participating in an asset tokenization test in 2022. The announcement states:
“Working with Clearstream, Northern Trust, SETL and others, SWIFT plans to conduct experiments in the first quarter of 2022 to explore how it can support interoperability in developing the tokenized assets market.”
SWIFT’s report highlights estimates that crypto assets could grow to $ 24 trillion by 2027
The SWIFT report contains a number of predictions and insights that are spread across the investigation. The organization says that by some estimates, crypto assets, stablecoins and tokenized assets could swell to around “$ 24 trillion in size by 2027.” SWIFT assumes that tokenized assets relate to almost anything and can also be broken down into pieces.
“Tokenization” continues the SWIFT report:
“It can be applied to stocks and bonds, but also to illiquid assets such as commodities, real estate or even art. For example, a stock or bond with a high value per piece (e.g. over $ 500) can be broken down into digital pieces who each have ownership and value. This increases the liquidity of the entire asset and makes it accessible by allowing a wider segment of the population to invest in assets that may have been inaccessible to them in the past.”
Plans for the first quarter of 2022 are to explore and leverage tokenization for traditional assets, securities, and other types of market infrastructures. “SETL and Northern Trust will support SWIFT and the participants in integrating between the various DLT environments and in orchestrating transactions with their respective capabilities. The results of the experiments will then be shared with the financial world,” said the SWIFT report finally.
“Our vision of instant and smooth transactions applies not only to traditional securities instruments, but also to new asset classes,” Patel said in a statement. “The insights from this exercise with leading capital market participants will help us to define and prioritize the specific steps that are required to enable seamless processes for tokenized assets.”
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