Key Insights:
- SWIFT chose the Ethereum Layer-2 network Linea for an interbank on-chain messaging system pilot, as per recent crypto news.
- More than a dozen major banks, including BNP Paribas and BNY Mellon, will participate in the trial phase.
- LINEA token price jumped from $0.02544 to $0.02932 in a few hours after the report.
SWIFT selected Consensys-developed Linea as its blockchain partner for testing an on-chain messaging system that could transform interbank communications, as The Big Whale reported on Sept. 26.
This crypto news triggered immediate market reaction. LINEA token price surged 15.2% within a few hours after the report surfaced.
Major Banks Join Blockchain Messaging Experiment
After months of negotiations, SWIFT selected Linea, an Ethereum layer-2 network, to experiment with transitioning its messaging system to an on-chain approach.
More than a dozen banks committed to the trial phase. This included BNP Paribas and BNY Mellon, signaling significant institutional interest in blockchain-based financial infrastructure.
A source at one of the participating banks noted in the report:
“The project will take several months to see the light of day, but it promises a major technological transformation for the international interbank payments industry.”
SWIFT also confirmed development of an “interbank token” alongside the messaging system pilot. Thus, expanding its blockchain experimentation beyond communications into digital currency infrastructure.
The source also highlighted that the selection of Linea represented a strategic decision focused on transaction confidentiality and regulatory compliance requirements.
Developed by Consensys, Linea operates as an Ethereum layer-2 network that emphasizes advanced cryptographic proofs for transaction privacy and security.
SWIFT’s banking consortium believed blockchain technologies could offer greater speed, transparency, and programmability in payment processing without compromising strict regulatory controls.
Linea’s focus on transaction confidentiality through cryptographic proofs aligned with banks’ data protection imperatives and compliance requirements.
The choice reflected SWIFT’s need to balance blockchain innovation with banking industry standards for privacy and regulatory oversight. Thus, making Linea’s privacy-focused architecture particularly attractive for institutional adoption.
Turning Blockchain Initiative Into Reality
The Linea partnership represented the latest milestone in SWIFT’s accelerating blockchain strategy launched in September 2024. SWIFT announced plans to test multi-ledger Delivery versus Payment (DvP) and Payment versus Payment (PvP) transactions, targeting the tokenized asset market, which is expected to reach $30 trillion by 2034.
SWIFT Chief Innovation Officer Tom Zschach previously emphasized interoperability challenges facing digital assets.
Zschach stated:
“Digital currencies and tokens have huge potential to shape the way we will all pay and invest in the future. But that potential can only be unleashed if the different approaches that are being explored have the ability to connect and work together.”
By October 2024, SWIFT announced that banks across North America, Europe, and Asia would begin live trials of digital assets and currency transactions over its network.
The trials aimed to demonstrate how existing SWIFT connections could process both traditional and digital asset transactions.
The Hong Kong Monetary Authority and Banque de France collaborated with SWIFT in preparation for the trials. They’re exploring foreign exchange experiments as part of the European Central Bank’s wholesale payments technology initiative.
SWIFT’s November 2024 pilot with UBS Asset Management and Chainlink demonstrated practical blockchain integration capabilities.
The program streamlined tokenized fund settlement and redemption using fiat currency, reaching over 11,500 financial institutions globally across more than 200 countries.
The pilot automated subscription and redemption processes, which traditionally required manual intervention, demonstrated end-to-end payment orchestration for fund subscriptions and redemptions through blockchain technology.
Addressing Digital Islands Challenge
SWIFT’s blockchain initiatives aimed to address the “digital islands” problem plaguing tokenized assets, where different platforms operated in isolation without interoperability.
The messaging system pilot with Linea aimed to bridge these gaps through standardized on-chain communications.
With 134 countries exploring central bank digital currencies and institutional investors showing interest in tokenized assets, SWIFT positioned itself as the critical infrastructure connecting disparate digital platforms.
The Linea partnership marked a significant step toward realizing SWIFT’s vision of seamless integration between digital and traditional assets, leveraging blockchain technology while maintaining the security and compliance standards required by global financial institutions.