SCION and cross-border payments: Enhancing security and compliance in distributed ledger networks
Summary
Cross-border payments remain expensive, slow, and opaque due to reliance on correspondent banking. Distributed ledger technology (DLT) offers a possible alternative, enabling peer-to-peer transactions at lower cost with greater speed, transparency, and resilience. However, DLT systems largely rely on the public Internet, which exposes them to network-based outages and attacks. SCION, a secure next-generation Internet architecture, can operate side-by-side with today's Internet to mitigate network-related risks. In addition to the security benefits, SCION also provides a novel approach to enforce regulatory compliance on a permissionless DLT with a governance model well-suited for multi-jurisdictional platforms. We present the first practical blueprint for deploying a DLT-based settlement system on SCION and demonstrate, through a simulation-based analysis of the real-world DLT system Sui, that SCION can mitigate more than half of routing-based network attacks, even when only partially adopted by DLT validators. Overall, SCION can provide a robust infrastructure foundation for DLT-based cross-border payment systems by enhancing their security, reliability, and regulatory compliance.
- Issue:
- 15
- Pages:
- 15
- JEL classification:
- E42, F33, G21
- Keywords:
- DLT reliability, DLT availability, Network attacks, Routing attacks, DDoS
- Year:
- 2025