BRICS set to abandon US Dollar for trade settlements; Doors for crypto adoption open

The United States Dollar (USD) has been losing influence over the global markets owing to the worsening foreign relations between countries such as BRICS. One of the biggest decisions seems to be coming from the Eastern hemisphere, which could have a long-lasting bearish impact on USD but could allow for a better future for cryptocurrencies.

BRICS gives up USD; Crypto could swoop in

BRICS, the bloc representing some of the biggest emerging economies in the world - Brazil, Russia, India, China and South Africa, is looking to abandon the use of Dollar for trade settlements completely. Earlier this week, Russian President Vladimir Putin stated the same publicly and even called for a new currency to conduct trade in.

This was followed by the bloc announcing the addition of six new countries from the dozens of applications it has recently received. The countries joining BRICS include Iran, Argentina, United Arab Emirates (UAE), Egypt, Saudi Arabia and Ethiopia. Starting in 2024, these countries will become a part of the group.

What is to be noted here is that of the six new countries, Saudi Arabia, UAE and Iran are some of the biggest oil exporters in the world. The United States has had trade relations with these countries for oil for the longest time, and most of it is settled in USD. 

However, with the countries joining BRICS and if the decision to abandon USD for trade passes, oil trades would be settled in an alternate currency. This could have a devastating impact on the value of the Dollar but prove to be beneficial for the alternative currency.

At the moment, no alternative currency has been announced, but the rapid adoption of cryptocurrencies does leave the door open for a digital asset to take the spot. Beyond Bitcoin, blockchain-based currencies have proved to be quick, efficient and cheap and could make for a valid replacement for the Dollar. 

However, the possibility of a stablecoin like Tether (USDT) or USD Coin (USDC) being chosen is more likely than other cryptocurrencies. The reason behind this is the steady value of the assets as compared to cryptocurrencies. Plus, stablecoins are largely unaffected by the volatility in the crypto and global markets, making them a viable alternative.

Nevertheless, if an alternate was to be picked by BRICS, it would most likely be a currency that is controlled by the bloc. However, the opportunity of the same being a blockchain-based asset cannot completely be ruled out owing to the benefits of the technology.