Two major Australian banks have joined global payments network Swift, as well as 32 peers in 15 other countries, to develop a new blockchain-based shared ledger that will standardise the instant cross-border movement of digital assets like cryptocurrency.

The new ledger will provide a secure, real-time log of transactions between financial institutions, providing a secure and permanent log of the movement of digital assets that complements the financial network Swift maintains across over 200 countries.

It will be based on a conceptual prototype developed by Ethereum blockchain specialist Consensys, which advertises itself as facilitator of the finance industry’s “broadband moment” and argues “Ethereum is the infrastructure to make the shift.”

The smart contracts based platform will provide a standard definition of digital asset ‘tokens’, enabling global banks to directly transfer digital assets via Swift – whose over 11,500 members exchange the equivalent of the world’s entire GDP every three days.

The blockchain based ledger concept is “the infrastructure stack of the future,” Swift CEO Javier Pérez-Tasso said in announcing the project at a recent company event, citing the success of live digital asset trials that have been running for the past two years.

“We are paving the way for financial institutions to take the payments experience to the next level.”

Swift’s standardised financial messaging means that three-quarters of payments reach their destination banks within ten minutes – with over 53 million messages sent every day, on average – and the new blockchain will extend this to digital assets as well.

Blockchain “can be a powerful infrastructure upgrade and a pivotal step toward global, instant, always-on cross-border transactions,” said Nigel Dobson, banking services lead at ANZ Bank, which along with Westpac will help build and test the platform in Australia.

ANZ has a “passion to deliver best-in-class payments experiences at scale,” he said, and “it’s our view that no single institution can achieve this alone.”

Many of the other participating banks – including Bank of America, BNP Paribas, Citi, DBS Bank, Deutsche Bank, HSBC, JPMorgan Chase, Mizuho Corporate Bank, Royal Bank of Canada, UBS, and Wells Fargo – also have established Australian operations.

A shot in the arm for blockchain

The new platform is a significant vote of confidence in blockchain technology, whose ability to create and manage unmodifiable and public records of transactions is the foundation of Bitcoin’s growth into an extremely valuable, global cryptocurrency.

Recognising its potential, the ASX infamously spent seven years and $250 million to build a blockchain replacement for its CHESS settlement system before pulling the plug in 2022 – a move that saw it sued by ASIC for after an extensive investigation.

Swift’s new platform, however, will reportedly be based on Linea, an Ethereum Layer 2 blockchain that Consensys has designed for speed and calls “enterprise-grade infrastructure for global finance…. Linea is Ethereum.”

And Ethereum, it is becoming increasingly clear, is set to be the significant driving force in real-world deployments of blockchain technologies – particularly with the inflow of investment since July’s US GENIUS Act bolstered cryptocurrency and stablecoins.

Said by some to be “the backbone of the stablecoin market”, Ethereum is “having its moment” and is well poised to benefit from the legitimacy of stablecoins – whose backing by real-world assets makes it less volatile than Bitcoin.

Smart contracts – like those used in Swift’s Ethereum based blockchain – allow banks and other financial services operators to embed anti money laundering (AML) and know your customer (KYC) checks, and to screen for “sanctioned entities”, during the transfer.

Yet a full transition will require banks and customers to be able to hold digital assets natively rather than converting them to local currency to settle transactions, as is currently required – but this, McKinsey said, would have “far-reaching consequences”.

Building smarter, more relevant blockchains

Surging interest in blockchains is “moving it from its position as a novelty to a strategic asset,” one analyst said in the leadup to this month’s London Blockchain Conference, “shaking up how industries conduct business and how trust is handled online”.

That includes efforts to address issues such as interoperability between blockchain networks, tokenisation of enterprise adoption at scale, AI integration, real-world assets, regulation and institutional integration, and decentralised identity (DID) systems.

This array of requirements continues to occupy the blockchain and blockchain adjacent industries – including legal analysts working to stay ahead of the changes – with Swift’s network a big step towards global interoperability and tokenisation standards.

Significantly, Swift’s announcement comes just days after the Australian Treasury released an exposure draft of proposed new legislation that would create two new classes of financial products, digital asset platforms and tokenised custody platforms.

These definitions would encompass cryptocurrency and other digital assets – tightening regulatory controls and investor certainty by applying strict financial services licensing requirements to crypto exchanges and other digital asset intermediaries.

As well as announcing its blockchain network investment, Swift said it will work with member banks to adopt a new standard for cross-border payments that includes transparency on foreign exchange fees and end-to-end visibility of transactions.

In November, the network will switch over to ISO 20022, an XML-based standard for financial transfer data that it says will allow payment messages to carry “richer, better structured and more granular data” to improve analytics and fraud detection.