Public, crypto-native chains won’t replace TradFi, SWIFT’s chief innovation officer argues, while the crypto world debates who really controls neutrality in finance.
Traditional financial institutions are unlikely to fully outsource settlement to external blockchains or distributed ledgers, according to SWIFT chief innovation officer Tom Zschach.
In a recent post and a series of comments on LinkedIn, Zschach argued that open-source code and network transparency alone don’t earn institutional trust, and that banks need systems where governance, compliance, and legal enforceability are controlled internally, rather than relying on third-party infrastructure.
The SWIFT executive pushed back against narratives popular in the crypto community, arguing that while distributed ledgers might bring programmability, institutions “don’t want to live on a competitor’s rails.”
He particularly described public blockchains, such as Bitcoin and Ethereum, as a “substrate,” a basic foundation for running code and moving value, but not a complete solution for trusted settlement, saying that rules and governance need to be added on top for institutions to trust them.
“Public blockchains are the base environment for execution. The transformation comes when you add the trust layer that makes outcomes legally enforceable, compliant and safe to scale,” Zschach argued in his post. He continued with a prediction for how traditional finance will interact with public blockchain protocols:
“And that’s why the next wave won’t look like crypto-native networks trying to replace finance. It’ll look like finance absorbing the best of public chains on its own terms.”
Code Alone Isn’t Enough
In his original post, SWIFT’s chief innovation officer refrained from naming any particular blockchain protocols. But in follow up responses, Zschach responded to comments about XRP in particular. Ripple is broadly known for working with TradFi institutions, positioning itself as focused on helping traditional financial firms integrate blockchain technology and payments rails.
Challenging the idea that Ripple and XRP’s regulatory record made the token suitable for banks, Zschach said in a now-deleted LinkedIn comment that “surviving lawsuits isn’t resilience” and emphasized that true trust depends on neutral, shared governance rather than relying on a single company’s infrastructure.
The SWIFT executive also argued that neutrality in finance isn’t determined by the number of nodes in a network, or by open-source code. Instead, it depends on governance, legal enforceability, and ensuring no single participant can tilt outcomes in their favor, Zschach stated.
“Code and validators alone don’t resolve billion-dollar disputes,” Zschach noted in a LinkedIn comment on Wednesday, adding that SWIFT operates as a neutral party with more than 11,000 institutions, not issuing assets or competing with network members.
Uneven Playing Field
Crypto entrepreneurs weren’t buying Zschach’s takes. Evgeny Yurtaev, co-founder and CEO of non-custodial crypto wallet Zerion, told The Defiant that true neutrality in finance comes from open, transparent protocols that enforce fairness through code.
“When governance happens behind closed doors or depends on regulators who may favour established players, it risks recreating the same imbalances DeFi set out to challenge. Open-source code enforces fairness for all by resisting hidden interference,” Yurtaev argued.
Merlin Egalite, co-founder of lending protocol Morpho, echoed this view in comments to The Defiant, emphasizing that infrastructure-level neutrality is key.
“At Morpho, we view neutrality as something that must be embedded at the infrastructure level: code should be immutable, governance minimized, and the protocol should not express opinions about which participants or strategies succeed,” Egalite said.
The Morpho co-founder also added that unlike SWIFT’s model, where trust rests on governance and legal systems that “inevitably favor certain actors, DeFi infrastructure provides a resilient foundation where no single party has the power to tilt the playing field.”
In order to be compliant with EU sanctions law, SWIFT, which is headquartered in Belgium, has disconnected most major banks of countries facing EU sanctions — currently cutting off people in Russia, Belarus, and Iran from the global banking system.
