SWIFT's Efforts to Advance Blockchain Face Legal Barriers in Settlements

SWIFT, the international financial messaging service, has launched a pilot project to

blockchain-powered messaging through , an layer-2 solution created by ConsenSys. This effort, which includes participation from more than a dozen leading banks such as BNP Paribas and BNY Mellon, is designed to assess whether Linea’s zero-knowledge rollup (zk-rollup) framework can make cross-border interbank payments more efficient while meeting regulatory and operational demands SWIFT Taps Linea for Blockchain Messaging Pilot [ 1 ]. The pilot aims to merge on-chain messaging and settlement, which could lessen dependence on intermediaries and outdated systems that many believe slow down international transactions SWIFT Selects Linea for Blockchain Messaging Pilot [ 2 ].

This initiative marks a major move in SWIFT’s ongoing efforts to evolve with the digital asset landscape. Linea’s zk-rollup approach, which merges privacy-centric cryptography with high-speed, low-fee transactions, is seen as a way to boost both speed and transparency in financial communications. By utilizing Ethereum’s security and enabling quicker settlements, Linea supports SWIFT’s mission to upgrade its infrastructure SWIFT Partners With Linea To Explore Blockchain Messaging In … [ 3 ]. Company leaders have pointed out that the sector has moved past the trial stage, now focusing on scaling solutions for various assets like tokenized deposits, stablecoins, and central bank digital currencies (CBDCs) SWIFT Launches Blockchain Pilot, Stablecoin Plans to Rival Ripple [ 4 ].

Despite these advances, significant hurdles remain, especially regarding legal finality and regulatory compliance. Tom Zschach, SWIFT’s Chief Innovation Officer, stressed the challenge of aligning blockchain’s confirmation processes with legal definitions of settlement. “Settlement is a legal construct, not a technical one,” he remarked, emphasizing that clear legal frameworks are essential for on-chain transactions to be recognized by courts LINEA price spikes 14% as SWIFT picks Linea for pilot [ 5 ]. Banks must also navigate operational risks, integration expenses, and regulatory scrutiny over token issuance, all of which complicate widespread implementation SWIFT Advances Blockchain Transition with Linea Pilot, … [ 6 ].

This pilot builds upon SWIFT’s earlier blockchain initiatives, such as interoperability tests with UBS and

, as well as its research into transferring tokenized assets across both public and private blockchains. In 2023, SWIFT showcased its ability to support cross-chain transfers, a development considered vital for expanding tokenized asset markets Global Banking Giant SWIFT Ignites Mainstream Adoption With … [ 7 ]. The current collaboration with Linea broadens this vision by piloting a settlement token similar to a stablecoin, which could rival established blockchain payment networks like Ripple’s system SWIFT Unleashes Ethereum Stablecoin Test on Linea, Signaling a … [ 8 ].

The market’s response to the pilot has been varied. Following the news, the LINEA token—native to the Linea network—jumped over 14%, signaling optimism about institutional uptake LINEA: How SWIFT’s Blockchain Pilot Is Transforming Global [ 9 ]. Still, experts warn that technical and regulatory challenges could postpone concrete results for some time. The outcome of this pilot may determine whether blockchain technology will supplement or fundamentally change global interbank communications, with SWIFT’s vast network of 11,000 financial institutions playing a pivotal role in shaping the evolution of cross-border payments Swift unlocks potential of tokenisation with successful blockchain ... [ 10 ].