As the BRICS 2024 summit convenes in Kazan, discussions on cryptocurrency have gained prominence among member nations, aligning with broader strategies to reduce reliance on the US dollar.
Russia is developing a settlement and payment infrastructure to bypass Western payment systems, a key element of the de-dollarization efforts expected from the summit.
CBDCs Potentially Reduce Dollar Dominance
Although there has been some progress in de-dollarization, BRICS countries still show a higher level of dollarization than the global average of about 47% for cross-border lending and international debt securities, highlighting the challenges ahead.
In response, Russia is advancing its m-Bridge initiative, which uses central bank digital currencies (CBDCs) for cross-border payments, potentially reducing the US dollar's dominance in global finance.
ING analysts note that "over the last four years, the share of BRICS foreign exchange in cross-border bank claims has increased to 15%, while other emerging market currencies have risen to 19%."
Putin Critiques Dollar Weaponization
If successful, m-Bridge could further diminish the dollar's role in international finance. However, the initiative faces organizational and governance challenges, despite interest from over thirty central banks.
During the summit, Russian lawmakers encouraged miners to sell their Bitcoin to international buyers, allowing countries to utilize Bitcoin and other crypto assets for imports. This information was shared by Matthew Siegel, Head of Digital Assets at VanEck, in a Bloomberg terminal report.
As the BRICS Summit Kicks Off, Top Lawmakes Are Pushing the Idea that Russian Miners Could Sell Their #Bitcoin to International Buyers, Who Would Use BTC and Other Crypto to Pay for Imports, Effectively Bypassing Western Sanctions.???? pic.twitter.com/AyI8Km64Y1
— matthew sigel, recovering CFA (@matthew_sigel) October 23, 2024
Russian President Vladimir Putin addressed the issue of the dollar's use as a political weapon, stating: "The dollar was used as a weapon. It is true. If they don’t let us work with it, what else should we do? We should seek other alternatives."
BRICS Enhances Crypto Infrastructure
Russia is working to establish a settlement and payment infrastructure that would bypass the Swift payment system, a key proposal emerging from the summit.
The partnership between BitRiver and the RDIF aims to create crypto and AI data centers across BRICS nations, enhancing computing power and reducing reliance on Western technology.
This initiative aligns with Russia's recent crypto mining regulations introduced in August 2024, which offer operational guidelines for miners and data center operators.
The collaboration reflects the coalition's growing influence in the crypto sector as BRICS nations struggle for a self-sufficient and technologically advanced ecosystem.
This article was written by Tareq Sikder at www.financemagnates.com.
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