Russia is Launching Crypto Based International Banking Infrastructure

Russian tech and manufacturing giant Rostec has announced that they're launching a SWIFT competitor build on blockchain.

Russia is Launching Crypto Based International Banking Infrastructure
Photo by Andre Taissin / Unsplash

When the US responded to Russia’s invasion of Ukraine, two big things happened that made economists sweat about the future of US world hegemony: first was the US freezing $300B of Russia’s foreign reserves. Countries often hold currency of other countries as reserves, and among those, reserves of US dollars and US bonds is king. They’re considered the safest investments in the world, and many economists and geopolitical analysts feared doing this would push much of the world from holding US dollars and bonds.

Second was removing some Russian banks from the SWIFT system. SWIFT is the international messaging system that banks use to send secure messages to each other. This means just about every inter-bank operation requires SWIFT to work, and taking a bank off the SWIFT system effectively means you’re isolating them from the rest of the world. Prior to this happening, everyone viewed it as the international banking nuclear option.

We all knew the fallout from these actions would take months or years to fully play out, but people in the know viewed this as a world changing moment. So far the fallout has largely been limited to strengthening relations between Russia and China, but this week we’ve seen what I expect to be a much larger change–a Russian built SWIFT alternative.

This week, Russian manufacturing and technology giant Rostec announced that they have built an alternative to the SWIFT system called CELLS. Rostec Executive Director Oleg Yevtushenko described it as “a digital payment system based on a blockchain platform can be used as a full-fledged replacement of SWIFT, providing high speed, secure and irrevocable transactions.”

The intention of CELLS is to decouple the Russian banking system from the West, making it totally independent and resistant to sanctions. The system is pegged at 100,000 transactions per second, with the potential to grow from there. CELLS isn’t just a messaging system though, the creators are trying to make it an ecosystem by adding in additional functionality, such as data storage, digital passports, a web app platform, and “digital housing and communal services.”