BRICS Payments Eyes De-Dollarization Using Crypto & Blockchain

With a new BRICS Payment System rolling out just weeks before, jaws dropping 159 countries have shown interest and willingness to adopt it. It poses a severe challenge to America’s much popular SWIFT banking system. Several nations think America is weaponizing the SWIFT system against countries that don’t have good terms with the country, thus looking for de-dollarization. The bloc nations are also mulling using blockchain and crypto for cross-border settlements with Russia initiating the first steps.

BRICS Payment System and De-Dollarization

Last month in July, the BRICS nations announced their own payment system as an alternative to America’s SWIFT with the aim of reshaping global trade. The alliance noted that this new payment system will facilitate cross-border transactions and settlements without relying on the U.S. Dollar. This move seeks to potentially alter the balance of economic power in global markets.

As per the latest reports, several other nations have extended support to the new BRICS payment system. One Russian official confirmed that nearly 159 countries are looking to adopt the system.

There are some talks going around that the nation bloc could introduce a gold-backed currency at the upcoming BRICS Summit in October 2024. Besides, the countries could also engage in using local currencies for cross-border settlements over the blockchain platform, to tackle SWIFT dominance.

The bloc is reportedly using the Ripple blockchain-based system for its payment system, putting XRP in the spotlight. Notably, XRP Ledger has become one of the most used blockchain for cross-border transactions.

Will the Bloc Use Blockchain and Crypto?

Although the bloc is mulling using a BRICS Payment System, it’s not going to be easy to replace the USD dominance, especially while trading with Western powers. Also with the nation bloc expanding, there would be too many local currencies for use in international trade. Earlier this year, Kremlin aide Yury Ushakov told the Tass News Agency:

“We believe that creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain. The main thing is to make sure it is convenient for governments, common people and businesses, as well as cost-effective and free of politics”.

Crypto can prove to be a strong bridge across the bloc nations as well as for international traders with Western countries. Digital assets provide a connecting link worldwide irrespective of political affiliations. Even Western nations have shown interest in embracing crypto with leaders like Donald Trump pledging to make Bitcoin the reserve currency of the USA.

Last week, Russian President Vladimir Putin signed a crypto bill to allow crypto mining operations in the country along with using cryptocurrencies for cross-border payments. Amid the heavy US sanctions following the Ukraine invasion, Russia’s use of crypto assets has been increasingly growing.

It will be interesting to see whether other nations within the BRICS bloc would also favor the use of crypto. For years, China has maintained an anti-crypto stand.