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International payments group Swift is creating its own blockchain to facilitate transactions between global banks, as it seeks to compete with the growing stablecoin sector.
Swift said Monday that it would work with Bank of America, Citigroup and NatWest, among other banks, to create a shared digital ledger that would be used to facilitate transactions in tokenized products, including stablecoins.
Swift said the move would improve cross-border transactions and that blockchain would allow it to “record, sequence and validate transactions and enforce rules through smart contracts.”
This decision comes against a backdrop of growing competition between large banks and payment groups and the cryptocurrency sector. The $300 billion stablecoin industry, dominated by issuers Tether and Circle, poses a threat to payments groups such as Swift because it allows users to transfer funds directly without relying on intermediaries.
The United States passed landmark legislation in July to regulate the stablecoin sector, a move that encouraged banks such as JPMorgan Chase and Citi to consider launching their own versions of the tokens, which are pegged to the value of the dollar.
Last week, nine European banks, including UniCredit, ING and Danske Bank, announced that they would jointly launch a euro-denominated stablecoin by the second half of 2026, as they seek to compete with the mainly dollar-denominated stablecoin market and explore the use of the token for their transactions.
Headquartered in Belgium, Swift is a cooperative group that facilitates cross-border payments between more than 11,500 banks and financial services companies around the world. It said its blockchain would “make instant and permanent cross-border transactions possible on an unprecedented scale.”
Swift will work with blockchain technology company Consensys to create a prototype of the ledger, which it will then test with banks to decide which transactions – in which currencies and between which countries – it should offer first. Consensys is led by Joseph Lubin, an early pioneer of the crypto industry and co-founder of Ethereum.
Last week, Swift said it was working to improve payment fees through its network through “complete predictability on the price and speed of retail transactions – with no hidden fees, full value transfers and instant settlement,” in another initiative to compete with stablecoin providers.
McKinsey said in a report this year that stablecoins posed “a direct challenge to traditional global payment systems” such as Swift because existing systems could take up to five days to complete a transaction, had multiple intermediaries and typically performed “manual or only semi-automated” anti-money laundering and other regulatory checks on customers.
