The adoption of bitcoin and stablecoins by the BRICS could speed up dedollarization

For decades, the US dollar has dominated international trade and has established itself as an essential global reserve. But this absolute reign is now questioned by the BRICS Bloc. Thus, geopolitical tensions and the rise of cryptos push several countries to look for alternatives to the greenback. Bitcoin and stablecoins then emerge as instruments capable of bypassing supremacy of the dollar, but paradoxically, they could also strengthen its influence.

Bitcoin and sanctions: a weapon to bypass the dollar

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

Faced with an exclusion from the traditional banking system, some states and businesses turn to Bitcoin to continue their trade.

• A tool for bypassing sanctions: Russia, an influential member of the BRICS Alliance under sanctions since the invasion of Ukraine, is increasingly using cryptos for its international transactions. Russian companies have adopted Bitcoin and other assets to circumvent the restrictions imposed on the SWIFT system;
• The gradual recognition of cryptos: Russia, which once considered cryptos as illegal, has changed its regulations to authorize their use in international trade and mining. A strategic decision which aims to reduce dependence on the Western financial system;
• A precedent with Salvador: the country, which has made bitcoin a legal currency, now holds between 15 and 20 % of its national BTC reserves. An initiative which, according to the Salvadoral government, could inspire other nations such as those of the BRICS who seek to diversify their reserves.

This growing adoption of cryptos by sanctioned countries testifies to a paradigm shift.

However, Bitcoin, although more and more used, is still too volatile to become a stable alternative to the dollar.

Stablecoins: a monetary paradox?

If Bitcoin is perceived as a resistance tool to the dollar, the stablecoins have an interesting paradox.

Their explosion in recent years has testified to increased demand for digital solutions, but involuntarily strengthens the domination of the greenback.

• The market dominated by the dollar: to date, 97 % of stablecoins in circulation are backed by the US dollar. Major actors such as 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 Carbon, President of Digital Chamber, underlines In a publication on X (ex Twitter) on November 12, 2024 that “this massive adoption of Stablecoins offers the United States a unique opportunity to extend their financial influence on a global scale”;
• The arrival of CBDCs as an alternative: certain central banks, especially in China and Europe, actively develop their digital central bank currencies (CBDC). If they manage to impose themselves, they could compete with stablecoins and reduce global dependence on the dollar.

The boom in Stablecoins shows that cryptos are not systematically dedollarization instruments, but sometimes reinforcement tools for American finance.

In addition, the question that then arises is whether other sovereign digital currencies will be able to counterbalance this effect.

Thus, the debate on dedollarization by cryptos is far from being decided. If bitcoin serves as an escape from sanctions, its adoption remains marginal as a real reserve currency.

In parallel, the boom in Stablecoins shows a desire for financial innovation, but paradoxically, it anchors the dollar even more in the digital economy.

The next developments will depend on the regulatory advances, the initiatives of the States and the way in which emerging technologies such as CBDC will reshape the global monetary landscape. One thing is certain: the place of the dollar is more and more disputed, but it will take much more than just crypto craze to see its reign really wavering.