Chainlink has revealed technology that allows financial institutions to utilize SWIFT messages for directing on-chain token transfers, making the messaging network compatible with nearly all blockchain environments.
By operating within the Chainlink Runtime Environment, banks and institutions can access blockchains using the same SWIFT infrastructure that has served them for decades. This approach enables institutions to engage with blockchains without the need for infrastructure upgrades, process replacements, or new identity and key management systems.
A notable initial use case involved a pilot program with UBS Tokenize, UBS’s in-house tokenization unit. Subscriptions and redemptions for a tokenized fund smart contract were initiated using ISO 20022 messages through the Chainlink Runtime Environment and SWIFT infrastructure. The SWIFT messages triggered subscription and redemption workflows in the Chainlink Digital Transfer Agent (DTA) standard.
This development builds on collaborations between SWIFT, Chainlink, and UBS in the Monetary Authority of Singapore’s (MAS) Project Guardian in 2024, showcasing the feasibility of settling tokenized fund transactions through off-chain cash settlements via SWIFT.
The advanced plug-and-play system further allows institutions to use SWIFT messages to initiate on-chain events, enhancing last-mile connectivity.
Sergey Nazarov, co-founder of Chainlink, remarked: “UBS is demonstrating how smart contract-based technologies can facilitate financial institutions in exploring new types of product lifecycle composability. The capacity to seamlessly engage with complex on-chain workflows through SWIFT messaging represents a significant advancement, reducing operational friction, supporting automated compliance, enhancing transparency, alleviating reconciliation burdens, and driving efficiency gains through programmable infrastructure.”