Russia’s Rostec introduced a blockchain-based alternative to SWIFT

RT-Tekhpriemka, the subsidiary of the state enterprise Rostec, presented the industrial blockchain platform dubbed CELLS claimed to be capable of 100,000 TPS.

Developed by the Novosibirsk Institute of Program Systems (NIPS), the platform is designed to host the entire ecosystem of blockchain-based applications and services. The core of the platform has become a payment system that can facilitate transactions in national fiat currencies, potentially serving as an alternative to SWIFT.

Oleg Yevtushenko, the Executive Director of Rostec, emphasized that such a platform can be used to sidestep sanctions imposed on Russia for its invasion of Ukraine. “The digital payment system running on the blockchain platform can be used as a viable substitute for SWIFT, offering high performance, security, and irreversible transactions. The system allows market participants to switch to payments in national currencies, eliminates sanctions risk, and ensures independence of the national financial politics.”

Besides international payments, CELLS also hosts data storage, a platform for developing web applications protected from hacking and DDoS attacks, a “digital passport” service, and a “public utilities” system.

The platform handles 100,000 TPS with the possibility of scaling up the transaction volume, plus it enables storing and transferring large media files in accordance with the legal requirements of the Russian Federation,” the press release reads. “The new product is directed at independent software developers, systems integrators, large enterprises, government and financial institutions, and banks.”

Rostec CEO Sergey Chemezow during the work meeting with Vladimir Putin.
Rostec CEO Sergey Chemezow during the work meeting with Vladimir Putin.

So far, the EU has suspended eight Russian banks from SWIFT, including Bank Otkritie, Novikombank, Promsvyazbank, Bank Rossiya, Sovcombank, Vnesheconombank (VEB), VTB Bank, and, just recently, Sberbank, Russia's largest financial institution.

The country was threatened to be cut out of SWIFT back in 2014 when it annexed Crimea. It prompted Russia to develop its own equivalent of financial transfer system dubbed System for Transfer of Financial Messages (SPFS). Few foreign countries currently use it, but the BBC reports that India is considering a Russian proposal to use it for payments in roubles. Additionally, Moscow is said to be working on connecting to China's Cross-border Interbank Payment System (CIPS), which processes payments in Chinese yuan.

Taking into account the ongoing development of SPFS, it’s unclear what role CELLS will play in making international trade possible for the sanctioned country. On the one hand, 100k TPS sounds pretty impressive – Ripple, which is advertised as an alternative to SWIFT, handles just 1,500 TPS with the possibility to scale up to 50k. On the other hand, the blockchain trilemma of decentralization, security, and scalability tells us that to achieve such a number, Russia has likely sacrificed the decentralization to achieve such a number, running its mammoth blockchain on one or just several nodes. Finally, the question arises whether foreign financial institutions would like to use such a highly centralized system.