Key Developments in Fiat and Blockchain Asset Settlement
Citi and Swift have successfully completed a trial demonstrating the simultaneous settlement of fiat and blockchain assets using a payment-versus-payment (PvP) model. This test enhanced Swift’s existing network by integrating smart contracts, rather than attempting to replace current banking infrastructure. The achievement signifies a crucial step towards enabling institutional-scale settlement for digital assets and stablecoins.
Integrating Traditional and Digital Financial Systems
The trial focused on augmenting Swift’s established infrastructure with blockchain-specific components, such as smart contracts, orchestration tools, and secure on-chain connectors. The objective was not to establish a cryptocurrency-exclusive transfer system, but to develop a hybrid model that allows banks to engage with tokenized assets without abandoning their current operational systems. This approach emphasizes the synchronization of traditional financial rails and blockchain networks, promoting collaboration over competition.
A central element of the experiment was a coordinated messaging layer designed to monitor every stage of a transaction. A built-in escrow function ensured that a blockchain transfer could only proceed if the fiat leg of the transaction was confirmed, thereby eliminating settlement risk. The system was automated to manage both components concurrently, ensuring that neither party faced exposure at any point during the process.
To simulate real-world market conditions, Citi utilized test USDC tokens on Ethereum’s Sepolia network. This demonstration confirmed that blockchain assets can be effectively synchronized with traditional foreign exchange flows without the need for manual intervention.
Growing Industry Momentum for Digital Asset Settlement
Both Citi and Swift view this trial as a foundational step, with plans to further refine the framework in collaboration with the broader financial sector. The goal is to standardize messaging, interoperability, and security protocols for large-scale digital asset settlements. Citi has expressed similar sentiments, highlighting that this work contributes to building global infrastructure for institutional adoption, moving beyond isolated pilot programs.
Citi’s research division anticipates a rapid acceleration of momentum in this area. Projections indicate that the stablecoin sector alone could reach approximately $1.9 trillion by 2030, fueled by regulated use cases and increased institutional participation. Current monthly stablecoin transfer volume is already approaching $1 trillion, despite much of this activity being transactional—serving as a temporary bridge before conversion back to national currencies.
Addressing the Settlement Gap in Digital Finance
While foreign exchange systems can currently identify tokenized assets, they were not designed for the synchronized finalization of both fiat and blockchain payments. This limitation has been a significant impediment to the widespread adoption of digital currencies in global finance. The Citi–Swift model directly addresses this challenge by enabling both legs of a transaction to settle simultaneously, irrespective of whether one side operates through traditional banking channels and the other through blockchain networks.
This trial represents a continuation of Citi's engagement with blockchain technology. The bank recently collaborated with Coinbase to streamline institutional payments and announced plans to integrate its Token Services platform with 24/7 USD clearing for round-the-clock cross-border transactions. Looking ahead, Citi is preparing to launch digital asset custody services in 2026, reinforcing its commitment to blockchain-driven financial infrastructure.