Author: Mohamed Allam, Messari Research Analyst; Translated by: 0xjs@Golden Finance
A few weeks ago, we introduced the concept of the BRICS as a new financial world order that is emerging.
One of the key players in this evolving landscape is Russia, which has shown increasing enthusiasm for integrating cryptocurrencies and blockchain technology into its financial system.
Recent developments in Russia
Three major events have occurred in Russia and the BRICS over the past two weeks:
1. Russia legalizes Bitcoin and cryptocurrencies Russia has taken a bold step to officially legalize the use of Bitcoin and other cryptocurrencies. This marks a major shift in the country's financial strategy and reflects its growing interest in decentralized digital currencies.
2. Russia legalizes Bitcoin and cryptocurrency mining Russia has also given the green light to Bitcoin and cryptocurrency mining operations, further integrating into the global cryptocurrency space. Russia's electricity costs are extremely competitive (about $0.06 per kilowatt-hour, compared to $0.18 per kilowatt-hour in the United States), which could make it a major player in Bitcoin mining, especially if it cooperates with China to provide mining equipment.
3. BRICS Bridge: A new payment system The BRICS countries are seeking to establish a new payment system for cross-border transactions that excludes the US dollar from the mechanism. The payment system will use local currencies for trade settlements and aims to end dependence on the US dollar. The new payment mechanism, called "BRICS Bridge", is designed to replace the US SWIFT system and reduce ties to the US dollar.
Russia's changing financial approach
It will be interesting to watch how international sanctions force countries like Russia to rethink their approach to global trade and finance.
As the BRICS continue to distance themselves from NATO and the West, they are increasingly looking for innovative ways to sustain and grow their economies.
Russia’s adoption of cryptocurrency would have seemed unlikely a few years ago, but now it is a strategic move within this broader context.
An important component of this strategy is the development of the BRICS Bridge, a digital payments platform for BRICS countries.
The independent financial system is intended to strengthen the BRICS countries’ economic independence vis-à-vis the Western system and could potentially integrate cryptocurrencies and central bank digital currencies (CBDCs).
Valentina Matviyenko, Chairperson of the Federation Council of Russia, recently confirmed that this independent financial payment platform is progressing steadily.
Russia’s changing trade dynamics further underscore the need for this strategy.
In 2023, Russia's total exports fell 28.3% to $425.1 billion, with supplies to Europe plummeting 68% to $84.9 billion.
Meanwhile, exports to Asia grew 5.6% to $306.6 billion, bringing Asia’s share of Russian exports to 72% from 49% in 2022.
By adopting blockchain, cryptocurrency, and CBDC, Russia can promote smoother and more secure trade within the BRICS, in line with its strategic pivot to Asia.
Source: The Rise of the BRICS
These efforts are a response to sanctions and a deliberate reshaping of the global financial landscape, proposing a new world order that challenges established norms.
These developments within the BRICS cannot be ignored.
They should be part of the global economic outlook because they are significantly changing the way international finance works and driving the de-dollarization process.
