Is payment giant SWIFT gearing up for a blockchain future?

Are TradFi and DeFi converging, moving towards common ground that includes tokenized assets, interoperability and regulation? Analysis

SWIFT is a payment colossus. It operates in more than 200 countries, has more than 11,000 financial institution customers and transmits some 8.4 billion financial messages each year. It is the world leader in cross-border bank-to-bank payments and recently played a key role in the West's economic sanctions against Russia.

That doesn't mean the Belgium-based co-op is immune to disruptive jolts, though. Critics have long argued that the interbank messaging system, founded in the 1970s, is "old, inflexible, slow and increasingly prone to cyberattacks". In May, Mastercard CEO Michael Miebach questioned SWIFT's ability to survive for the next five years. Meanwhile, it continues to be threatened by a rising tide of blockchain-based payment networks on one side and an expected torrent of Central Bank Digital Currencies (CBDCs) on the other.

But, last week, in a sign that even traditional financial networks may (eventually) change color, SWIFT confirmed a proof-of-concept project with blockchain oracle provider Chainlink. If all goes well, SWIFT bank users could easily access and transfer digital assets across multiple blockchain platforms. A few days earlier, SWIFT also announced that it was using fintech Symbiont's enterprise blockchain platform to improve its messaging for corporate events such as dividend payments and mergers.

These developments raise an intriguing question: rather than engaging in a zero-sum fight to the death, are traditional finance (TradFi) and decentralized finance (DeFi) businesses converging? assets, DeFi, interoperability and, yes, regulation?

Co-opting an existing...