TLDR
- SWIFT has introduced a blockchain-based shared ledger designed to modernize cross-border payments.
- Over 30 global financial institutions, including JPMorgan and HSBC, are backing SWIFT’s new blockchain initiative.
- The blockchain ledger will enable real-time, always-on records of transactions, improving interoperability with digital assets.
- Ripple’s long-standing ambition to replace SWIFT’s payment system faces significant setbacks due to SWIFT’s move to blockchain.
- Critics argue that SWIFT’s blockchain announcement has dealt a significant blow to XRP’s vision of dominating the global payments market.
SWIFT’s latest announcement has put an end to the long-standing idea that XRP would replace its global payment system. At its annual conference in Frankfurt, the financial messaging leader introduced a blockchain-based shared ledger. This new system, backed by over 30 major financial institutions, aims to enhance cross-border transactions.
SWIFT’s shift towards blockchain technology marks a significant step in the modernization of the financial sector. The new ledger, designed in partnership with Consensys, will provide real-time transaction records. SWIFT’s CEO, Javier Pérez-Tasso, emphasized that the move aims to improve the payment experience across the financial world.
SWIFT’s Blockchain-Based Ledger
SWIFT’s blockchain ledger will serve as a continuous log for cross-border payments. The ledger will operate in real time and maintain 24/7 availability. Smart contracts will govern transaction rules, ensuring greater efficiency across various networks.
Over 30 global institutions, including JPMorgan, HSBC, Santander, and Deutsche Bank, are backing SWIFT’s initiative. The blockchain ledger will also work with existing fiat infrastructure, enabling smoother interoperability with digital asset ecosystems. These changes are designed to modernize SWIFT’s operations and create a more flexible payment system.
Pérez-Tasso described the ledger as a stepping stone toward improving the financial system. He stated, “This is our commitment to enhancing the future of payments.” The announcement demonstrates SWIFT’s commitment to modernizing its systems to meet evolving needs.
Ripple’s Long-Term Vision and SWIFT’s Challenge
Ripple, the company behind XRP, had long marketed its technology as a competitor to SWIFT’s system, aiming to offer a faster and cheaper alternative using blockchain technology. Ripple executives, including Brad Garlinghouse, had even predicted XRP could capture 14% of SWIFT’s transaction volume within five years.
However, with SWIFT now integrating its own blockchain-based ledger, the likelihood of XRP replacing SWIFT has greatly diminished. Dan Morehead of Pantera Capital noted that Ripple’s efforts to challenge SWIFT have encountered significant setbacks. He acknowledged that the industry now faces a complex landscape, with institutions likely to opt for their own blockchain solutions.
Critics of XRP quickly seized on SWIFT’s move. Chainlink’s Zach Rynes remarked that the news had effectively “destroyed the XRP thesis.” Many now believe that SWIFT’s integration of blockchain technology has dealt a significant blow to Ripple’s vision.
