Unfazed by SEC tumult, top banks work to make blockchains interoperable

Amid all the tumult in the crypto world, some of the world’s largest banks have been quietly reflecting on ways to bring digital assets to institutional customers. And last week, a plan emerged.

A collaboration, under the guidance of the Society for Worldwide Interbank Financial Telecommunication, better known as Swift — the global financial communication and payments network — will soon be testing ways for permissioned bank-owned blockchains to not only talk to each other, but also communicate with public blockchains like Ethereum.

Participants in this global experiment include more than a dozen financial heavyweights, including Citi, Lloyds Banking Group, BNP Paribas, BNY Mellon, and the Australia and New Zealand Banking Group. Chainlink, the decentralized oracle network, is developing the technology to “bridge” these sundry blockchains.

“Institutional investors increasingly are considering investments in tokenized assets,” stated the Belgium-based Swift, which connects more than 11,000 financial institutions worldwide, in its June 6 blog. Its headline neatly summarized the task at hand: “Swift explores blockchain interoperability to remove friction from tokenized asset settlement.”

The problem is that digital assets today are tracked on a wide range of blockchain networks that are not interoperable, Swift further explained. Each chain has its own functionality and liquidity profile, and there’s a lot of technical “friction” when giant institutions try to interact with one another, let alone public blockchains like Ethereum or Polkadot.

This test phase will look at three specific use cases, according to Swift:

“The first use case will involve the transfer of tokenized assets between two wallets on the same public blockchain network (Ethereum Sepolia testnet). The second involves the transfer of tokenized assets from a public blockchain (Ethereum) to a permissioned blockchain. And a third use case will test the transfer of tokenized assets from Ethereum to another public blockchain.” 

Chainlink, for its part, “will be used as an enterprise abstraction layer to securely connect the Swift network to the Ethereum Sepolia network, while Chainlink’s Cross-Chain Interoperability Protocol (CCIP) will enable complete interoperability between the source and destination blockchains,” Swift stated. 

Unfazed by SEC lawsuits

In an interview with Cointelegraph last week following the news, Chainlink co-founder and CEO Sergey Nazarov was…