Citi and Swift recently completed a successful trial proving that it is now possible to settle payments between fiat and digital currencies using a Payment-versus-Payment workflow. This is a major step forward that shows how traditional finance and blockchain can be integrated using a hybrid model.
Read on to know how Citi and Swift achieved this milestone and how exactly it works.
This was achieved by using Swift’s existing infrastructure, which was further enhanced with institutional-grade blockchain connectors, orchestrators, and smart contracts.
Citi and Swift created a comprehensive messaging system capable of tracking the end-to-end process, from trade initiation to settlement confirmation. It carefully manages the unique details and characteristics inherent in fiat-to-digital currency transactions.
It also includes an escrow mechanism to address the irreversibility of blockchain transfers, while ensuring PvP settlement and eliminating the settlement risk of both parties.
A central orchestrator coordinated the order of messages between fiat and DLT legs to ensure synchronisation and finality. For the trial, Citi used test USDC tokens from Circle on Ethereum’s Sepolia network to simulate a near-production environment.
Citi and Swift will continue to refine this approach with the broader financial community and build the standards needed for secure, scalable digital asset transactions.
“These trials with Swift mark a big step forward in building the kind of infrastructure needed for digital currency transactions,” said Ayesa Latif, Head of FX Products.
Jonathan Ehrenfeld, the Head of Strategy at Swift, highlighted that the company is uniquely positioned to connect tokenised networks with the traditional financial community. The collaboration also demonstrates how Swift can use its existing network while adding the advanced tools needed to manage fiat-to-digital currency peer-to-peer (PvP) transactions.
Citi GPS expects the stablecoin market alone to grow to nearly USD 1.9 trillion by 2030 as new use cases emerge and regulations become clearer.
Stablecoin volumes are nearing USD 1 trillion a month, but they are mostly used as a bridge and often converted back to local currency.
Settlement between fiat and digital currencies remains tricky because they work differently, as fiat is held in bank accounts and digital assets on blockchains. Current FX tools can identify digital assets, but they are not built to coordinate synchronised settlement between fiat and digital currencies.
This is exactly what Citi and Swift are aiming to tackle with this initiative.
Citi has been making big moves in digital assets.
In October, it teamed up with Coinbase to develop digital asset payment capabilities for institutional clients. It also revealed plans to connect its Citi Token Services platform with its 24/7 USD Clearing system, enabling 24/7, multibank cross-border instant payments for institutional clients in the UK and US.
Looking ahead, Citi aims to launch crypto custody services in 2026 to hold digital assets for clients.
They use Swift’s network with blockchain connectors and smart contracts to sync fiat and digital transfers, ensuring both settle at the same time.
PvP ensures both sides of a trade settle together, preventing one party from sending funds while the other fails, which increases safety in cross-currency payments.
Citi is building blockchain-based payment tools, linking tokenized services to 24/7 clearing and preparing crypto custody to support institutional clients.
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