Russia is stepping up its measures to control cryptocurrencies in a broader campaign within BRICS to demonetize the British pound and the US dollar. As geopolitical realities remain fluid, the BRICS countries including Brazil, Russia, India, China, and South Africa are looking at how to reduce the US dollar’s hegemony in foreign trade.
Russia’s latest moves seek to create a legal environment for using cryptocurrencies, and especially in international settlements which may be instrumental in the group’s effort to diminish the USD’s dominance.
Russia’s Crypto Regulation Strategy
The Russian government has had, at least, a tense and neutral attitude towards cryptocurrencies throughout the years but the last few months and years show that Russia is now eager to control cryptocurrencies and blockchain technologies. The first of these relates to international trade payments for which crypto could potentially be used as an alternative to USD payment.
This means that instead of using the dollar, the BRICS nations would trade without having to involve the dollar thus reducing its value in the international markets.
To this end, Russia is constructing legal standards that would govern the application of digital resources such as the cryptocurrency. It is in line with the country’s long-term vision on establishing an over the counter financial world that is not dictated by the West.
Regulating cryptocurrencies has been embraced by the BRICS coalition as a way of continuing with the struggle of ending the domination of the western financial system. Cryptocurrencies offer a chance for BRICS countries to avoid playing by the rules of traditional financial systems and contribute for a new type of economic cooperation.
Thus, Russia’s action here is not only viewed as legislative regulation of the industry but can also be regarded as the turn towards cooperation with other BRICS members.
Russia, therefore, by following a regulated approach to cryptocurrency, is preparing a ground for the possible use that could enable the BRICS nations to transact without being restricted by existing global financial order. It remains conceivable that comparable development could be revolutionary, as much in the energy sector which evidently has significant influence over Russian control.
Reducing the Hegemony of the USD via Crypto Regulation
The decline of the USD as the leading currency in the global market becomes one of the objectives set by Russia and the members of the BRICS. Towards this end, as the acceptance of cryptocurrencies rises, Russia views the opportunity to advance this agenda.
Cross-border transactions in cryptocurrencies can also be a possible replacement for SWIFT, which controls most of the world’s interbank communication and is based in the West. Also, as stated earlier on, the US sanctions are making a negative impact on Russia’s economy and as such, the country is on the lookout for ways in which it can shield itself from outside pressures.
Cryptocurrencies, especially because of their being an independent digital currency and not having a central authority, offer the opportunity for carrying out the financial operations without involving Western financial companies, which would be likely to regulate.
As for the last factor, it is worth mentioning that the change of the financial strategy in the mentioned BRICS countries is not only in the Russian interest. China and India, being BRICS nations, also have been pondering the idea of cryptocurrencies as a means to turn away from the dominance of the greenback. As these nations carry on the experimentations of the blockchain technology and the digital currencies, the cornerstones for the new incumbent global system of financial structure are established.
Challenges Ahead
Concerning the impact on USD, it is quite simple to predict the possible decrease of USD’s dominance due to crypto adoption, with significant question marks for Russia and the BRICS as a whole. Current legal systems recognize digital assets only to a limited extent, and by extension, observers fear information volatility and cryptocurrency insecurity. The ability to regulate it while at the same time being able to encourage innovation for players such as Russia will be vital.
Further, mutual cooperation regarding crypto issues between the BRICS countries will be inevitable. Every country has its own set of regulations and if those regulation systems are not in sync then, there is not a completely optimized solution for trading with less reliance on USD. Still, Russia’s activity regarding crypto regulation is a positive shift, and it shows the country’s willingness to resist the worldwide dominance of the USA and other Western countries in the sphere of finance.
