Last week during Sibos, Chainlink co-founder Sergey Nazarov joined Nasdaq TradeTalks’ Jill Malandrino to discuss what it means for banks to move onchain by integrating Chainlink’s Cross-Chain Interoperability Protocol (CCIP).
On the heels of Swift’s collaboration with top banks to develop a CCIP-powered blockchain interoperability model, Nazarov summarized why CCIP is ideally suited to become the global standard for connecting traditional finance to blockchains.
“I think it was chosen because it has various key features that banks value, such as risk management and the ability to securely and reliably connect to hundreds of chains efficiently,” he said. “We have features that banks and capital markets users deeply need.”
Crucially, CCIP allows banks to integrate with a vast array of public and private blockchains through their existing backend infrastructure including Swift’s PKI.
“Banks have made a very large investment in the security of their existing infrastructure,” Nazarov explained. “Banks rely on these systems to a very large degree and there’s huge amounts of value on there, so they’re not getting rid of them. So really, the only way that banks are going to be able to use blockchains efficiently is from their existing infrastructure.”
During an exclusive Chainlink networking event at Sibos, Nazarov and Swift’s Head of Securities Strategy, Jonathan Ehrenfeld, spoke to how far Chainlink has come in connecting DeFi to the world’s capital markets. Nazarov told Malandrino he’s also excited to see how much banks have progressed in moving onchain.
“I’m actually pleasantly surprised this year about how far many people are,” he said. “I think everyone has now realized that there’s going to be huge fragmentation. Every bank will have at least one chain.”
He envisions CCIP connecting hundreds of private bank chains and public blockchain applications into a single internet of contracts, just as TCP/IP connects disparate systems into one internet. Such a hyperconnected blockchain ecosystem would allow banks to advance beyond custodying digital assets to creating their own stablecoins and tokenizing real-world assets onchain.
ANZ, one of the largest institutional banks in Australia, is already utilizing CCIP to power cross-chain, cross-currency real-world assets in the form of green financial products designed to protect the Great Barrier Reef.
“I would say we’re at the beginning of something very, very big here for the capital markets,” Nazarov said. Were CCIP to enable the value held in global capital markets to move onchain “even at a small percentage,” he believes the blockchain industry could grow exponentially.
“What I’m really seeing is that banks moving onchain is basically the next wave of value that’s going to flow into our industry.”
Watch the full interview.