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ConsenSys and SWIFT Collaborate on Blockchain Prototype
Joseph Lubin, the co-founder of Ethereum and CEO of ConsenSys, recently shared insights on Bloomberg Crypto about their partnership with SWIFT. This collaboration involves developing a blockchain-based shared ledger prototype for SWIFT, integrating ISO 20022 financial messaging into its global infrastructure. This initiative, announced at the Sibos conference in Frankfurt, aims to enhance global messaging with a permissioned, continuous ledger.
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SWIFT’s Integration with Ethereum
Lubin elaborated on the project, confirming that the initial build will focus on ISO 20022 messaging. While SWIFT emphasizes its message-centric approach, some banks are keen to explore deeper settlement layers. Lubin stated, “It is a project under development with significant technological involvement from both sides.” Despite being cautious about timelines, he acknowledged the potential for SWIFT’s comfort in releasing details in the future.
SWIFT’s vision for the shared ledger, revealed on September 29, emphasizes recording, sequencing, and validating transactions. The project is designed to facilitate instantaneous, round-the-clock cross-border transactions, supporting the shift towards digital finance with interoperability across various networks. Though the base chain remains unnamed, ConsenSys is highlighted as a vital technology partner, with a strong focus on ISO 20022 compliance and smart contracts.
The Convergence of TradFi and DeFi
In his interview, Lubin pointed to a growing convergence between traditional finance (TradFi) and decentralized finance (DeFi). He noted a significant change in the financial landscape, with banks showing increased interest in DeFi mechanisms. Lubin described the prototype as a collaborative effort with SWIFT controlling the messaging aspect, while banks delve into more advanced processes like atomic settlement.
Implementing Ethereum: Practical Implications
Though SWIFT hasn’t officially disclosed the underlying blockchain, reports suggest that the prototype utilizes Ethereum’s infrastructure, specifically ConsenSys’ Linea, an Ethereum layer-2 network employing zero-knowledge proofs. This setup maintains a permissioned perimeter, aligning with bank compliance needs. ConsenSys has confirmed its role in supporting SWIFT’s early-stage prototyping for the shared ledger.
The timing is notable as SWIFT’s initiative coincides with the rapid expansion of the $300 billion stablecoin market and various bank tokenization pilots. The project aims to enhance existing financial rails, allowing banks to adopt tokenized processes for improved speed, transparency, and transaction finality.
Lubin’s Perspective on Digital Asset Treasuries
Lubin also discussed digital-asset-backed treasuries (DATs) on Bloomberg, highlighting a new Ethereum-focused vehicle he leads at SharpLink. He posited that corporate ether accumulation mitigates volatility, viewing ether as a productive asset with staking advantages, unlike bitcoin. He envisions a growth model akin to Berkshire Hathaway, deploying an expanding ETH base across Ethereum protocols for sustainable growth.
The strategic message is clear: As financial institutions adopt Ethereum-based systems for messaging and settlement, ETH becomes a strategic asset, offering exposure to the network’s activity and yield potential.
At the time of reporting, Ethereum (ETH) was valued at $4,484.
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