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Citi and Swift have announced a landmark trial proving the feasibility of settling payments between fiat and digital currencies in a Payment-versus-Payment (PvP) workflow, demonstrating a powerful hybrid model for interoperability between traditional financial systems and Distributed Ledger Technology (DLT) networks.
The trial was achieved by leveraging existing Swift infrastructure, seamlessly augmented with institutional-grade blockchain connectors, orchestrators and smart contracts.
Ayesa Latif, Head of FX Products at Citi
Ayesa Latif, Head of FX Products at Citi, said:
"These trials with Swift represent a significant leap forward in understanding and developing infrastructure required to support digital currency transactions. Our collaboration has demonstrated how existing financial systems can be enhanced with blockchain technology to unlock new levels of speed, transparency, and risk reduction in cross-currency settlements."
Jonathan Ehrenfeld, Head of Strategy at Swift
Jonathan Ehrenfeld, Head of Strategy at Swift, said:
"Swift is uniquely positioned to be the secure and trusted single point of access for seamless connection between the tokenised ecosystems and the established global financial community. This collaboration with Citi proves that we can leverage the reach of our existing network while introducing advanced capabilities required to orchestrate fiat-digital currency PvP."
The initiative underscores Citi's commitment to delivering client-centric and scalable solutions for the digital asset ecosystem. The trials mark a milestone towards the development of market-ready solutions that can be scalable, standardised and integrated into global financial systems.
The rapid growth of digital currencies, such as tokenised deposits and stablecoins, presents an opportunity to transform cross-border payments and financial infrastructure. Citi GPS has projected that total stablecoin issuance market could reach USD1.9 trillion by 2030, driven by expanding use cases and increasing regulatory clarity.
Whilst stablecoin transaction volume is approaching USD1 trillion a month according to the report, they predominantly serve as an intermediary. Recipients of stablecoins, which are primarily US dollar denominated, often choose to exchange them for local fiat currency.
Settlement between fiat and digital currencies such as stablecoins remains challenging as they are fundamentally different in nature. Unlike fiat currencies that are typically held within accounts at correspondent banks, digital currencies are held by user wallets on various blockchains and generally do not allow for reversible transactions.
Whilst FX messaging standards, such as MT30X, have been designed to identify digital assets and confirm FX deals on them, they are not meant to instruct synchronised settlement between fiat and digital currencies. The initiative between Citi and Swift aims to address this issue.
Citi and Swift designed a holistic messaging standard capable of tracking the end-to-end process, from trade initiation to settlement confirmation. This standard uniquely accounts for the distinct data fields and characteristics inherent in fiat-digital currency transactions.
The solution also incorporated an escrow mechanism to overcome the challenge of irreversible blockchain transactions, whilst ensuring PvP settlement and eliminating settlement risk of both parties. A central orchestrator further managed the sequenced exchange of messages, coordinating between the fiat and DLT legs to ensure synchronisation and finality.
In the trial, Citi also utilised test USDC tokens from Circle on the Ethereum Sepolia testnet, to simulate a near-production environment. Citi and Swift will continue to refine the approach in collaboration with the broader financial community and establish the messaging and operational standards necessary for scalable, institutional-grade digital asset transactions.
The current implementation is not atomic as the workflow spans two distinct technologies, meaning the payments are synchronised but not executed as a single indivisible transaction.
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