Late last year, SWIFT said it was piloting tokenized assets with Clearstream, Northern Trust, SETL and others. Today it was announced that the blockchain pilot was successfully concluded. It linked tokenization systems between central securities depositories (CSDs) and global custodians.

Across multiple networks running different technologies, tokens were issued, settled on a delivery versus payment basis, and redeemed. Settlement was executed both conventionally and with central bank digital currency (CBDC).

In the same way that SWIFT currently provides the glue for cross-border payments, it wants to create a common interface to allow asset tokenization to take off. We have already seen the launch of numerous tokenization platforms. The risk is that each one becomes a new silo of assets. Investors and asset managers shouldn’t have to integrate with many different platforms. That would negate a key benefit of blockchain in reducing friction. Therefore, SWIFT is looking for an interoperability solution. It also recently announced a proof of concept with Chainlink Labs to link various public blockchains.

“Our vision of instant and frictionless trading applies not only to traditional securities instruments, but also to new asset classes,” said Vikesh Patel, SWIFT’s chief securities strategy officer. “Insights from this exercise with major capital markets participants will help us define and prioritize the concrete steps required to enable seamless processes for tokenized assets.”

While real-world tokenized assets have yet to reach a tipping point, activity has picked up in recent months. This is due in part to the significant innovation costs and benefits that distributed ledger technology (DLT) offers, as well as favorable legislation to be implemented in several jurisdictions, including France, Germany, Switzerland, Luxembourg, Singapore, and Japan. Additionally, both Europe and the UK are planning sandboxes for experimentation.

Estimates of the potential market for tokenization vary substantially. In 2015, the World Economic Forum predicted that 10% of GDP, or roughly $14 trillion, would be linked to blockchain by 2027. BCG recently used the same 10% to estimate $16 trillion by 2030, but considered the figure it was conservative.

SETL used its PORTL token interoperability solution to integrate a variety of enterprise blockchain technologies in a permissioned manner. These included R3’s Corda, Hyperledger Besu, Hyperledger Fabric, Digital Asset’s DAML smart contract language, and SETL’s own ledger.

A report on the project is expected to be released this week ahead of SWIFT’s SIBOS conference in Amsterdam next week.