The worldwide bank messaging system Swift has launched a set of experiments in partnership with decentralized oracle network provider Chainlink to examine more closely how major financial institutions might integrate with blockchains.
The tests, which build on existing Swift infrastructure that powers the messages sent among global financial firms, can use Chainlinks technology to move value in three key ways: between each institutions private blockchains, between their private blockchains and public blockchains like Ethereum, and between two public blockchains.
Building upon existing infrastructure, as opposed to starting with wholly new tech, should reduce the costs and complexity of interacting with blockchains, according to a statement from Swift on Tuesday. Participants in the testing will include Citi, BNP Paribas, and BNY Mellon, with results of the study likely to be published later this year.
Chainlink CEO Sergey Nazarov said if these tests with the banking giants prove successful, and enable wider interconnectivity, it could boost the entire financial ecosystem. A pilot program, most likely, would be the next step.
Itll accelerate the amount of value that flows from banks into public chains, which will naturally increase the value within them, which should increase the total global market cap of our industry by trillionsand eventually tens of trillions, Nazarov told Fortune.
The most recent tests build upon an initial proof of concept between Swift and Chainlink announced last year that used the latters cross-chain interoperability protocol, or CCIP, a system that lets blockchains communicate.
The agreement between crypto native Chainlink and traditional finance stalwart Swift, a.k.a. Society for Worldwide Interbank Financial Telecommunication, comes as the Securities and Exchange Commission is suing top crypto exchanges Binance and Coinbase.
Although increasing hostility from U.S. regulators has shaken confidence in the space and depressed crypto prices, Nazarov said that, unlike in previous downtowns, the overall interest shown from TradFi giants hasnt waned.
Once it becomes more acceptable for banks to go into the public markets, he added, having that connection to the public blockchain will be very valuable.
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