Blockchain is not a silver bullet, and the need to avoid fragmentation is more important now than ever, says Swift’s head of securities strategy Jonathan Ehrenfeld. In an article published on independent financial think tank OMFIF, he calls for the industry to prioritise interoperability.
Tokenisation is gathering pace. While blockchain “has potential to bring new levels of trust and assurance to processes that incorporate numerous counterparties”, the technology is still in its infancy and “not a silver bullet”. A “common connectivity layer” is thus necessary to eliminate friction between the existing financial infrastructures and the emerging blockchain networks hosting tokenised assets.
Before regulations have caught up to technological developments, Jonathan Ehrenfeld belives that “the onus is on the industry to prioritise interoperability”.
The old with new
He references a collaborative study conducted by Swift last year that proved the firm’s infrastructure capable of acting as “a single access point” that can “efficiently instruct the transfer of tokenised value over a range of public and private blockchains”. The experiment showed that tokenised assets can “work in concert with existing financial infrastructure”.
The future of tokenisation is expected to be “multi-chain”, he says. It is therefore “vital to enable secure interoperability to ensure global reach”.