There are reports all over the media due to the proposed national currency for BRICS. The BRICS nation comprises Brazil, Russia, India, China, and South Africa.
This week, Pavel Knyazev, the Russian ambassador to the BRICS, which is part of Russia’s Foreign Ministry, stated that the BRICS countries are working on establishing a new reserve currency to better serve their economic interests.
He also mentioned that they are discussing the possibility and prospects of setting up a common single currency based on the basket of currencies of the BRICS countries.
The major question on the lips of every crypto enthusiast is what this means for crypto.
The issue that led to the BRICS trying to launch a joint currency to trade among themselves can be traced to the Russia/Ukraine war that is going on presently.
With a lot of sanctions going the way of Russia as a result of the ongoing war with Ukraine.
The BRICS are a conglomerate of Russia and its allies. In other to find a way around the sanctions imposed by America and Europe, they are looking to create or adopt a currency that will rival the United States dollar.
And there were reports last week that China has completed its first yuan-LNG trade.
During the start of the Russian invasion of China, Ukraine resorted to the use of Bitcoin as means of donation. This shows one of the important use-cases of cryptocurrency.
Will the proposed currency affect cryptocurrency?
For now, I don’t see it affecting cryptocurrency as they are different, except the currency is Digital.
If the Currency is digital, then it will strengthen the adoption of cryptocurrency globally. If it’s FIAT, then it’s going to be the same as FIAT currency has been around for a long.
BRICS opting for a digital currency might bring about a regulatory framework into the cryptocurrency ecosystem and make it more centralized and build a digital currency that won’t be susceptible to volatility like cryptos.
Choosing not to adopt the blockchain route will likely disadvantage BRICS now that more countries are exploring this technology.
If other countries adopt the BRICS currency, then the US dollar might no longer be the global reserve currency. This means the USDT, USDC, and other stablecoins might no longer be pegged to the dollar or possibly lead to the creation of stablecoins in other currencies.
The impact of the proposed cannot be stated with certainty, unless implemented, and see the impact of the policy on the global crypto finance system.
However, the creation will likely be a win-win for crypto, especially with the stringent regulation crypto companies are facing in the US. The BRICS might likely show themselves to be more crypto-friendly.
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