The Chainlink oracle network and the SWIFT bank transfer system have entered into agreements with many traditional financial institutions to connect the latter to blockchain networks.
Partners include Citi, BNY Mellon, Lloyds Banking Group, BNP Paribas, Clearstream, Euroclear, SIX Digital Exchange, Depository Trust and Clearing Corporation, and Australia and New Zealand Banking Group.
The purpose of the initiative is to test the ability of organizations to connect to various networks to transfer tokenized assets.
According to the press release, Chainlink will provide connectivity to both public and private blockchains. For the first time, the joint project became known in September 2022.
To implement the connection to the blockchains, an interconnection protocol jointly developed by the companies is used.
According to SWIFT, there is a widespread belief in the traditional sector that distributed ledger technologies can “improve efficiency and reduce costs” for operations. At the same time, simplification of settlement processes will attract more investors to private markets and increase liquidity.
“The trading of tokenized assets is still a niche activity in the regulated field. To scale the market, financial institutions must be able to easily interoperate with multiple blockchain-based networks in a secure and reliable manner,” the press release reads.
SWIFT added that it is unlikely that one particular blockchain will dominate this issue. Each hotel chain will be able to perform a narrowly focused function for a particular financial institution, the company believes.
According to Chainlink co-founder Sergey Nazarov, the cooperation will bring traditional markets into the world of cryptocurrencies and DeFi applications.
“If even a small part of the quadrillions of dollars flowing through the SWIFT network and its more than 11,000 partner banks gets into blockchains, the entire industry can grow several times very quickly,” Nazarov said.
Recall that in March 2023, Chainlink launched the Functions project, which connects decentralized applications with traditional web platforms.
Earlier, Israeli startup StarkWare expanded its partnership with Chainlink to accelerate the rollout of its StarkNet L2 solution.
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