Swift has officially selected Consensys-developed Linea for its pilot transition from traditional interbank messaging to a blockchain-based system, as reported by The Big Whale on September 26. After several months of negotiation, Swift opted for the Ethereum layer-2 network to test the efficacy of interbank on-chain messaging against its existing centralized infrastructure.
The pilot will involve over a dozen keen participants such as BNP Paribas and BNY Mellon. These banks will explore both the transition in messaging systems as well as the integration of stablecoins. An insider from one of these banks shared that while the project may take several months to fully materialize, it holds the potential to revolutionize the international interbank payments industry technologically.
Swift’s selection of Linea for its blockchain technology endeavors represents a significant step into the digital asset realm, following its earlier announcement of a digital asset initiative planned for September 2024. The pilot aims to explore multi-ledger Delivery-versus-Payment and Payment-versus-Payment transactions with a focus on the burgeoning tokenized asset market, projected to reach a staggering $30 trillion by 2034.
The rationale behind Swift’s choice of Linea centers on the network’s transaction confidentiality, achieved through sophisticated cryptographic proofs. The banking consortium prioritized blockchain solutions that uphold data protection and regulatory compliance demands, while delivering enhanced speed, transparency, and programmability compared to traditional payment methods. Linea, developed by Consensys, stands out for its privacy-preserving transactions via zero-knowledge proofs, which align with banks’ requirements to merge blockchain benefits with current regulatory standards. Its connection to Ethereum ensures a robust infrastructure with reduced transaction costs thanks to layer-2 technology.
Swift’s global network, responsible for connecting over 11,000 financial institutions, processes billions of payment instructions annually via its messaging system. The current system, burdened by numerous relays and centralized infrastructure, could see enhanced operational efficiency through blockchain technology adoption.
In alignment with Swift’s continuous advancement in blockchain technology, the organization has conducted diverse digital asset trials since revealing its digital asset strategy. These trials were executed across various geographic locations including North America, Europe, and Asia in October 2024, with a notable tokenized fund settlement pilot alongside UBS Asset Management and Chainlink completed in November of that year.
The ongoing Linea pilot complements Swift’s broader blockchain exploration, which includes involvement in the Bank for International Settlements’ Project Agora and initiatives linked to central bank digital currencies. This integration of blockchain technology signals a transformative phase for Swift and its extensive network of global banking partners.