Chainlink has announced a breakthrough that can potentially revolutionize how financial institutions deal with digital assets. Taking advantage of both Chainlink Runtime Environment (CRE) and a combination of Swift and ISO 20022 messaging standard, now institutions can easily address tokenized fund subscription and redemption processes through their existing systems.
This type of integration eliminates the issue of costly infrastructure updates, or identity and key management packages. Instead, banks and asset managers can connect to blockchain networks through the same Swift infrastructure that they have been relying on throughout decades.
This will significantly reduce the technical barriers that have been a major impediment to use of tokenized assets in the global capital markets.
About Chainlink
Chainlink is the most popular oracle system that supports decentralized finance and institutional blocks use of blockchains. Its infrastructure offers interoperability, compliance, data standards essential to tokenized assets, stablecoins, lending, etc. Chainlink has achieved tens of trillions of value in transaction and is already connected to significant institutions like Swift, Euroclear, Mastercard, etc.
Chainlink is leading in ensuring the global capital markets go onchain by integrating traditional financial rails with blockchain infrastructure.
Building on Project Guardian and UBS Collaboration
This was accomplished after the successful collaboration between Chainlink, Swift and UBS in the Monetary Authority of Singapore Project Guardian in 2024. The pilot project proved that it was possible to operate subscriptions and redemptions of tokenized funds through Swift messaging delivered via CRE and handled by Digital Transfer Agent (DTA) technical stand of Chainlink.
With Swift using ISO 20022 messages in the UBS pilot, fund subscriptions and redemptions were launched and processed onchain with smart contracts.
The new development builds upon that demonstration of the concept, by making the process more general and scalable. Institutions can now initiate a variety of onchain events using familiar Swift messages, making the financial system more interoperable.
Unlocking the $100 Trillion Fund Industry
The fund industry with its more than $100 trillion assets to manage worldwide will gain in a significant way due to simplified tokenized processes. When institutions are linked to blockchain-based processes, it becomes possible to enjoy the speed, transparency and risk management benefits of tokenization without breaking operational continuity.
CRE and Swift integration is packaged as a plug-and-play offer which simplifies the process of institutions wishing to experiment or venture into blockchain based markets. Such a solution would result in faster adoption, reduced costs and reduced operational friction, as well as programmable compliance and automated reporting.
Industry Leaders Highlight the Impact
Co-Founder of Chainlink Sergey Nazarov stressed that the success was crucial:
We are demonstrating how a new technical standard and smart contracts can enable transfer agents and others to run tokenized asset workflows onchain. The technologies are allowing UBS to show how financial institutions can experiment with new product lifecycle composability.
The solution reconciles one of the largest areas of pain in the capital markets by incorporating blockchain infrastructure into the existing messaging systems. This process is automatable and has the capacity to streamline and minimise errors that then lead to improvements in transparency as well as efficiency throughout the transaction lifecycle.
