Ask HN: If Russia gets banned from SWIFT, how it would reflect on crypto? | Hacker News Reader

Ask HN: If Russia gets banned from SWIFT, how it would reflect on crypto?

13 pointssarusso7 comments

Realistically speaking, I mean...

There is a good article on The Guardian about it: https://www.theguardian.com/technology/2022/feb/24/what-is-s...

Essentially the CIPS as already mentioned would be most likely alternative, which is partially why people are afraid to exercise this option as it could lead to weakening of USD and SWIFT in general. Crypto is considered by the author an option but honestly I fail to see how it could work at scale, since you could refuse to interact with known accounts (https://www.coindesk.com/policy/2022/02/24/us-to-expand-sanc...)

Probably wouldn't change much in crypto, those that can't use SWIFT would likely just switch to a similar payment system that China developed, CIPS (Cross-Border International Payments System).

Thanks, exactly the answer I was looking for.

"SWIFT does not facilitate funds transfer: rather, it sends payment orders, which must be settled by correspondent accounts that the institutions have with each other."[...] While SWIFT transports financial messages in a secure manner, it does not hold accounts for its members; nor does it perform any form of clearing or settlement.[1]

Both Bitcoin and Ethereum can perform the settlement of transactions. Ethereum currently has support for complex financial transactions with Smart Contracts. A SWIFT replacement could include settlement on chain, but on-chain transactions for SWIFT type co-ordination is probably too expensive with Bitcoin and Ethereum without the use of L2 and Lightning Network support for the co-ordination feature of SWIFT.

If this were done, it would only succeed if the smart contracts are open source, formally verified and audited by a third party. While Taproot adds tapscript support[2] to bitcoin, there still remains the development of sophisticated financial products.

As a net exporter of Energy products, Russia would probably lean more towards Bitcoin or other PoW protocols, as their customers could run mining operations with the energy they are buying. This would exclude Ethereum when the PoS merge occurs.

[1]: https://en.wikipedia.org/wiki/SWIFT [2]: https://bitcoinops.org/en/topics/tapscript/

Thanks, very clear explanation. Curious how a third party is always required to get involved in the end.

of course, typical crypto boys thinking of how would it reflect... :D

No, I was actually looking for a real answer as phillipseamore just gave. Perhaps I should have phrased the question differently in terms of SWIFT alternatives.

Reply on news.ycombinator.com