The BRICS could benefit from crypto if they integrate it into their system or adopt the underlying technology to create their own currency.
The possibilities of using crypto, notably Bitcoin, in daily transactions have progressed, particularly after the US greenlighted spot Bitcoin exchange-traded funds (ETFs). This rise in real-world utility coincides with the BRICS nations’ exploration of a shared currency to reduce the US dollar’s dominance.
For context, BRICS is an acronym for a group founded by five major developing national economies: Brazil, Russia, India, China, and South Africa.
The union advocates reforming international financial institutions, such as the International Monetary Fund and the World Bank and seeks a more inclusive and representative global governance structure.
BRICS Expanding Reach
In early 2024, the organization welcomed six new members, including Argentina, Egypt, Ethiopia, Iran, Saudi Arabia, and the United Arab Emirates. This year, BRICS is expected to continue to focus on de-dollarization, expansion, and the development of a common currency.
While the purpose of BRICS is to promote cooperation and consultation on significant issues of mutual interest among the participating countries, it’s not difficult to realize their shared stances against the Western-led global order.
Russia, facing sanctions over its Ukrainian conflict, stands as a prime example. Similarly, China and the US have witnessed escalating disputes across the trade, technology, and military domains. Among them, Iran’s recent BRICS entry carries even greater weight.
The relationship between the US and Iran has been marked by decades of tension, with various conflicts and confrontations. Tensions have been fueled by Iran’s nuclear program, support for proxy forces in the Middle East, and the US response to these activities
The US has imposed sanctions on Iran, and there have been instances of military confrontation and strikes against Iranian-backed groups in the Middle East. The potential for a worsening conflict between the two countries has significant economic, political, and security implications.
With Iran now an official member of BRICS, other members can benefit from Iran’s regional position and access to the north. Iran also finds increased diplomatic backing within the BRICS alliance, potentially opening up new avenues for economic cooperation, trade, and investment.
The Role of Bitcoin and Crypto
As part of their mission to diminish the reliance on the US dollar, the BRICS may consider adopting Bitcoin or crypto as their common currency.
According to reports from the Russian news agency TASS, the Bank of Russia is actively exploring the introduction of an ‘experimental legal regime’ for cryptocurrencies, specifically designed for use in export-import deals.
Elvira Naiullina, the head of the regulatory agency, outlined plans for creating special organizations tasked with mining cryptocurrencies and facilitating payments for cross-border trade deals. The initiative, while in its early stages, aims to tackle the challenges posed by international sanctions and the exclusion of Russia from the US dollar-powered global payment infrastructure.
Naiullina’s deputy, Alexey Guznov, said that the Bank of Russia is in discussions with the government to define the participation criteria for organizations in the experiment. In the initial phases, government-sponsored companies are likely to take the lead. The experiment is seen as a response to Western sanctions imposed on Russia, which have excluded the country from conventional global payment mechanisms.
According to the International Business Times, it is becoming increasingly plausible that Bitcoin could play an important role in the new international monetary system. Additionally, “the rise of Bitcoin and other cryptocurrencies in recent months is a clear indication that investors and others are seeking alternatives to the current system.”
The euro, seen as a potential challenger to the US dollar, has not succeeded in dethroning it. Meanwhile, the yuan and ruble are still far from posing a serious threat to the US dollar. Considering Bitcoin’s widespread adoption and potential to challenge the US dollar, it deserves serious consideration.
Even if the BRICS doesn’t integrate crypto or Bitcoin into its system, it may employ blockchain technology as the foundational element for developing its common currency.