SWIFT Tests A Blockchain Ledger With 30+ Banks -- What It Means For XRP

Key Points

• SWIFT is building a blockchain-based shared ledger as an add-on to its existing network for global money transfers.

• More than 30 household-name banks are participating, including Bank of America, Citi, JPMorgan Chase, and Toronto-Dominion Bank.

• For XRP, the near-term impact looks limited, but long-term competition for institutional transfer links could increase.

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International payments need a fresh coat of modern paint. Old-school solutions from Society for Worldwide Interbank Financial Telecommunication (SWIFT), MoneyGram, and Western Union are too slow and too expensive. Newer options like PayPal (NASDAQ: PYPL) or Wise (OTC: WIZE.Y) aren't always faster or cheaper.

Many investors see XRP (CRYPTO: XRP) and the integrated RippleNet service as the obvious answer. Ripple transactions can move money from one country to another in seconds, with average fees of $0.0002 per transfer. Ripple Labs has established local banking partnerships in dozens of countries, making the transfer experience seamless for most users. Send a few dollars to Sweden, and your friend, uncle, or e-commerce retailer receives a handful of Swedish kronor (SEK) right away.

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Surely, the XRP/Ripple system must disrupt international payments over time. No one else is working on a modern, digital global money transfer platform, right?

Image source: Getty Images.

What SWIFT's blockchain move is (and isn't) at this early stage

Except good old SWIFT is actually making digital moves right now.

The Belgium-based organization just kick-started its own crypto-powered payment system. It's not exactly a brand-new service, but the addition of a blockchain-driven transaction ledger to the existing SWIFT system. The effort involves more than 30 financial institutions, including global giants like Bank of America (NYSE: BAC), Citi (NYSE: C), JPMorgan Chase (NYSE: JPM), and Toronto-Dominion Bank (NYSE: TD). Some of these mega-banks have been loud critics of blockchain solutions in the past; it's nice to see them on the other side of the argument here.

The first step is an early stage conceptual prototype by Ethereum (CRYPTO: ETH) developer ConsenSys. This approach combines SWIFT's decades of trust-building with a fast, secure, and low-cost digital ledger, most likely using tokens on the Ethereum blockchain.

"A digital shared ledger, created with the SWIFT community, offers transparency and interoperability, two priorities to effectively manage cross-border payments in a 24/7 world," said AJ McCray, Bank of America's head of global payments, in a prepared statement.

What this means for XRP right now (spoiler alert: not much yet)

XRP investors will note that Monday's announcement didn't erase the Ripple token from the crypto market. XRP gained 0.2% on Monday -- a bit slower than Bitcoin's (CRYPTO: BTC) 2.5% jump or Ethereum's 2.3% price increase, but still a solid price gain.

SWIFT's blockchain ambition is just not that big of a deal -- yet.

You see, SWIFT appears to hold most of the cards in this game. Rumor has it that the group is kicking the tires of an XRP-based payment system, too. There may be other blockchain programs in the works that just haven't seen daylight and made headlines yet.

Indeed, SWIFT might end up with several new transaction rails that can handle payments faster and cheaper than the old money wires. Some future version of the Ethereum system could end up side by side with a Ripple-like XRP setup. Other options could include versatile blockchain platforms such as Polkadot (CRYPTO: DOT), Solana (CRYPTO: SOL), or Avalanche (CRYPTO: AVAX). I'm not saying that these cryptos absolutely have active SWIFT work going on, but I sure wouldn't be surprised to hear the news.

SWIFT and XRP are playing the long game

At their core, blockchains and cryptocurrencies are just a new way to manage secure transactions and ownership on a global scale. I see no reason why SWIFT shouldn't explore these newfangled digital ledgers in several concurrent development projects.

One day, different SWIFT transactions might just use different back-end systems, depending on what's best in each specific case. If I'm on the right track with this line of thought, I'm sure XRP will handle plenty of that business. Then again, so will Ethereum and maybe even the old bank-messaging systems.

Only time will tell what SWIFT will look like in 5 or 10 years, or which cryptocurrencies will shape the group's services over time. But SWIFT is not going quiet into that good night, choosing instead to explore the new world of digital payments. It's not the end of XRP's hopes and dreams, but perhaps the start of a more pleasant SWIFT experience.

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Bank of America is an advertising partner of Motley Fool Money. JPMorgan Chase is an advertising partner of Motley Fool Money. Citigroup is an advertising partner of Motley Fool Money. Anders Bylund has positions in Bitcoin, Ethereum, Polkadot, Solana, and XRP. The Motley Fool has positions in and recommends Avalanche, Bitcoin, Ethereum, JPMorgan Chase, PayPal, Solana, Wise Plc, and XRP. The Motley Fool recommends the following options: long January 2027 $42.50 calls on PayPal and short September 2025 $77.50 calls on PayPal. The Motley Fool has a disclosure policy.