Among the biggest highlights from Day 1 of SmartCon 2022, including Chainlink co-founder Sergey Nazarov’s forward-looking keynote, was the announcement that Chainlink, the blockchain industry’s leading oracle network, and SWIFT, the world’s biggest provider of secure financial messaging services, are working on an initial proof of concept using Chainlink’s Cross-Chain Interoperability Protocol (CCIP) to enable communication and token movement between large financial institutions and a number of different blockchains.
The announcement came during a mainstage panel including Sergey Nazarov; SWIFT’s Strategy Director, Jonathan Ehrenfeld Solé; Director of Business Innovation and Fintech Strategy at DTCC, Stephen Prosperi; and Head of Enterprise Tokenization at BNY Mellon, Victor O’Laughlen.
Chainlink’s collaboration with SWIFT dates back to an initial proof of concept illustrating how smart contracts can simplify bond issuance and redemption. “That was quite successful, and that was the first step of the love story between SWIFT and Chainlink, which continues today,” said Ehrenfeld Solé.
He elaborated on the primary factors driving this latest PoC around CCIP, emphasizing, “There is undeniable interest from institutional investors into digital assets.” Because institutional investors want access to digital assets and traditional assets simultaneously, he said SWIFT is focused on bridging the gap between its private key infrastructure (PKI) connecting over 11,000 global banks and a growing number of blockchains.
Ehrenfeld Solé explained the unnecessary risk SWIFT would have to undertake to build its own connections to individual blockchains. “If we bet on ten (chains) this year and those ten disappear, then we’re losing investment on that. This is where CCIP comes into play.”
Connecting to Chainlink’s secure middleware allows SWIFT to interact with any blockchain through its existing PKI and messaging standard, which is already used by the vast majority of the world’s banks. “Then you have these two infrastructures that are secure, that are reliable, that are scalable,” Ehrenfeld Solé said of how SWIFT and Chainlink can work together.
“Just like we don’t want to build PKI for the 11,000 banks of the world, because that’s already been done, SWIFT doesn’t necessarily want to build an integration with every chain on the planet, because that’s the body of work that we’re focused on,” Nazarov agreed.
Like SWIFT, post-trade market infrastructure provider DTCC is also focused on optimizing its core business for cross-chain interoperability. “Last year, we processed 2.5 quadrillion dollars worth of securities,” Prosperi said. “We often get asked if that’s a real number, and it is in fact a real number. So naturally we’re very focused on blockchains and the opportunities that it can present where we sit in the industry.”
He said DTCC’s view of the blockchain space as a multi-chain ecosystem informs its approach toward infrastructure.
“We think of how things coming down the pike like CCIP can be used to help us maintain that view, to not build something that’s already built and to not have to stand up infrastructure to support 100 blockchains if we can support one piece that can then plug into those 100 blockchains today and maybe 200 blockchains tomorrow.”
O’Laughlen said BNY Mellon, founded in 1784 by Alexander Hamilton, is similarly moving toward a multi-chain future. “We continue to stay relevant because we innovate and we want to continue to stay engaged and grow and innovate,” he explained. Today, BNY Mellon services 20% of the world’s investable assets. “We see blockchains and Chainlink not only connecting market infrastrastructure to each other, but even within banks,” O’Laughlen said.
Nazarov underscored the complexity of interacting with different blockchains, especially at the rate the blockchain ecosystem is changing, and why he believes Chainlink’s middleware can bridge the gap.
“It’s a problem that we’re eagerly taking on and making sure that we have good solutions so that the capital markets can interact with blockchains efficiently and more and more value can get on blockchains and become cryptographically guaranteed and highly reliable. I think that’s the goal that we all have, whether we work in the capital markets or in the public blockchain world – at the end of the day, we just want a more reliable, more secure global financial system.”