August 2, 2022

Developers Are Working on a Blockchain-Based SWIFT Substitute

Researchers at a major Russian university are developing a blockchain-based alternative to the cross-border banking network SWIFT.

As sanctions are imposed on Russia, alternatives to the global banking network SWIFT could gain popularity. 

Domestic SWIFT Competitor Uses Blockchain

A project called Domestic SWIFT is currently under development at the Competence Center of the National Technology Initiative at St. Petersburg University in Russia.

According to a statement from researchers, the project consists of a “decentralized interbank financial messaging system.” Those researchers also say that a pilot version of the system is “ready for testing and can be used in banks.”

Though Domestic SWIFT does not use a traditional blockchain, its approach will offer similar benefits. Perhaps most importantly, because it relies on a distributed ledger and network, members cannot be restricted or forcibly disconnected, and they all have the same access rights.

 

The system also promises a high throughput rate. Test results show that Domestic SWIFT can handle 25,000 messages per second on a single node. Developers say that further scaling is possible.

Russia’s Tense Relationship With SWIFT

Domestic SWIFT is one of many SWIFT alternatives in the Russian market. The Bank of Russia has used a non-blockchain alternative called the System for Transfer of Financial Messages (SPFS) since 2014. SPFS is used by Russian banks and at least 52 foreign organizations.

Other competitors also appear to be under development. In June, a Russian state-owned technology developer called Novosibirsk Institute of Software Systems (NIPS) announced that it was developing a blockchain platform called CELLS to complement SWIFT.

Earlier this year, SWIFT blocked seven Russian banks from its network in opposition to Russia’s invasion of Ukraine. If such sanctions continue to be imposed, SWIFT alternatives could become indispensable in Russia.

SWIFT is one of the world’s largest bank messaging and settlement networks, handling about half of all cross-border transactions. Over 300 Russian banks use the service, meaning that banks excluded from the system will need to find a replacement if the war continues.

Though SWIFT is popular for bank transactions, it is not the only way to make cross-border payments. Payset offers numerous alternatives, including international IBAN bank accounts, multi-currency accounts, payment cards, and foreign currency exchange.

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