The Adoption Of Bitcoin And Stablecoins By The BRICS Could Accelerate Dedollarization

For decades, the US dollar has dominated international trade and has established itself as an essential global reserve. However, this absolute reign is now being challenged by the BRICS bloc. Thus, geopolitical tensions and the rise of cryptocurrencies are pushing several countries to seek alternatives to the greenback. Bitcoin and stablecoins are emerging as tools capable of circumventing the supremacy of the dollar, but paradoxically, they could also reinforce its influence.

Bitcoin and Sanctions: A Tool to Bypass the Dollar

The economic sanctions imposed by the United States have accelerated the adoption of cryptocurrencies in several BRICS countries.

Faced with exclusion from the traditional banking system, some states and businesses are turning to Bitcoin to continue their commercial exchanges.

• A tool for circumventing sanctions: Russia, an influential member of the BRICS alliance under sanctions since the invasion of Ukraine, is increasingly using cryptocurrencies for its international transactions. Russian companies have adopted Bitcoin and other assets to bypass the restrictions imposed on the SWIFT system;
• The gradual recognition of cryptocurrencies: Russia, which once considered cryptocurrencies illegal, has modified its regulations to allow their use in international trade and mining. A strategic decision aimed at reducing dependence on the Western financial system;
• A precedent with El Salvador: the country, which has made Bitcoin legal tender, now holds between 15 and 20% of its national reserves in BTC. An initiative that, according to the Salvadoran government, could inspire other nations like those in BRICS seeking to diversify their reserves.

This growing adoption of cryptocurrencies by sanctioned countries reflects a paradigm shift.

However, Bitcoin, although increasingly used, remains too volatile to become a stable alternative to the dollar.

Stablecoins: A Monetary Paradox?

While Bitcoin is viewed as a tool of resistance against the dollar, stablecoins present an interesting paradox.

Their explosion in recent years reflects a growing demand for digital solutions but inadvertently reinforces the dominance of the greenback.

• The dollar-dominated market: to date, 97% of the stablecoins in circulation are pegged to the US dollar. Major players like Tether (USDT) and Circle (USDC) facilitate billions of dollars in cross-border transactions while maintaining the hegemony of the dollar;
• An opportunity for the United States: Cody Carbone, president of the Digital Chamber, highlights in a post on X (formerly Twitter) on November 12, 2024, that “this massive adoption of stablecoins offers the United States a unique opportunity to expand their financial influence globally”;
• The arrival of CBDCs as an alternative: some central banks, particularly in China and Europe, are actively developing their central bank digital currencies (CBDCs). If they manage to establish themselves, they could compete with stablecoins and reduce global reliance on the dollar.

The rise of stablecoins shows that cryptocurrencies are not necessarily tools for dedollarization but sometimes reinforce American finance.

Furthermore, the question arises as to whether other sovereign digital currencies can counterbalance this effect.

Thus, the debate on dedollarization through cryptocurrencies is far from settled. While Bitcoin serves as a workaround to sanctions, its adoption remains marginal as a true reserve currency.

In parallel, the rise of stablecoins demonstrates a willingness for financial innovation, but paradoxically, it further embeds the dollar in the digital economy.

Future developments will depend on regulatory advancements, states’ initiatives, and how emerging technologies like CBDCs will reshape the global monetary landscape. One thing is certain: the position of the dollar is increasingly contested, but it will take much more than a mere crypto craze to see its reign truly waver.