Chainlink has announced a new method to bridge traditional financial infrastructure with blockchain-based systems, leveraging Swift’s ISO 20022 messaging format. The company revealed the approach at an event in Frankfurt, presenting it as a way for financial institutions to trigger and manage digital-asset workflows without the need to overhaul their existing core systems.
The mechanism is powered by the Chainlink Runtime Environment (CRE), which processes Swift messages and translates them into blockchain actions. This setup allows banks and service providers to interact with both public and permissioned blockchains seamlessly.
UBS Tokenize in the Pilot
The first implementation of this initiative involved UBS Tokenize, the Swiss banking giant’s in-house tokenisation division. In the pilot trial, subscriptions and redemptions of a UBS tokenised fund smart contract were initiated through ISO 20022 messages sent across Swift. CRE then received these messages and executed fund workflow logic via the Chainlink Digital Transfer Agent (DTA) technical standard.
This demonstration showed how offchain banking infrastructure can be linked with onchain fund processes, bringing tokenised assets closer to mainstream finance.
Building on Project Guardian
Chainlink positioned the pilot as a continuation of its earlier collaboration with UBS and Swift under the Monetary Authority of Singapore’s Project Guardian in 2024. That project explored tokenised fund settlement with offchain cash transfers using existing payment systems.
By building on this foundation, the current trial emphasises interoperability between conventional financial rails and blockchain applications. The key advantage is that institutions can use tools, compliance frameworks, and identity systems they already rely on, reducing the friction usually associated with adopting new technologies.
Simplifying Compliance and Fund Management
Chainlink described its messaging-to-smart-contract setup as a plug-and-play model for intermediaries such as transfer agents. By shifting more workflow logic onchain, the model aims to simplify reconciliation processes and automate compliance requirements. For asset managers and service providers, this could translate into greater efficiency and reduced operational risk.
Notably, Chainlink has not disclosed timelines for a commercial rollout, nor did it confirm the participation of other asset managers beyond UBS Tokenize. However, the company suggested that the model is highly relevant to the global funds industry, particularly as tokenisation gains traction across capital markets.
A Glimpse into the Future of Finance
The initiative demonstrates a practical path for integrating legacy banking systems with blockchain ecosystems without disrupting existing processes. By allowing something as established as Swift messages to direct smart contract execution, Chainlink and UBS are signalling that tokenised finance can be embedded within the current financial order rather than existing outside of it.
While still at a pilot stage, the project underscores a broader industry trend: financial incumbents are seeking safe, incremental ways to explore blockchain without abandoning tried-and-tested infrastructure. For now, UBS has taken the test drive, but the implications for other global institutions could be significant.
