SETL will provide the technology and organize a pilot of tokenized asset management between SWIFT, Clearstream, Northern Trust, and others using traditional payment mechanisms and central bank digital currencies. Distributed ledger technology appears well-suited to the problem of delivery versus payment process which requires both the payment and the delivery of a security be guaranteed:
“SETL announces that it will be working with SWIFT on an innovation pilot, as the cooperative explores how it can support interoperability in developing the tokenised asset market. In a series of experiments early next year, SETL, SWIFT, Clearstream, Northern Trust and other market participants will explore the issuance, delivery versus payment (DVP), and redemption processes to support a frictionless and seamless tokenised asset market. The experiments will use both established forms of payment and central bank digital currencies (CBDCs).
The market for tokenised assets is expected to reach 24 trillion USD by 2027. In response, SWIFT is undertaking a series of experiments alongside market participants from the tokenised and traditional asset ecosystem to explore how it can support the growth and development of the tokenised asset market. One of the critical risks in a world where tokenised and traditional assets co-exist is creating various technologies, platforms and regulatory environments. SWIFT’s focus will therefore be on ensuring interoperability, interconnecting market participants and simplifying their operations by completing activities centrally that would otherwise be performed bilaterally between institutions.”
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group