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The swiftly update subcommand isn't updating the current in-use toolchain as decided by the .swift-version file if it is present. Instead, it's only updating the global default.
I would expect that the update subcommand takes into consideration the in-use toolchain, update that, and also bump the version in the .swift-version file.
In the case where there is no .swift-version file then it should behave as it does today without creating this file. The swiftly use subcommand should remain the entry point in using a project setting to decide the toolchain version and update should just follow suit, whether the project has decided to use global or local configuration.