Kirill Dmitriev, the Head of the Russian Direct Investment Fund (RDIF) has stated that the BRICS countries might discuss the possibility of creating the organization’s own cryptocurrency as an alternative to other payment systems. This fits in with existing preferences, where the BRICS member states prioritize payments made between the countries in their own currencies.
“Another topic discussed by the financial committee was cryptocurrencies. The creation of BRICS’ cryptocurrency as an alternative to other payment tools might also be discussed. However, cryptocurrencies are also being discussed as one of the possible options for financial settlement. For particular payments it might be quite relevant and serve as a good alternative to the dollar or any other currency. We estimate that the mutual investments of the BRICS countries might see an increase by 3-4 times due to such instruments as BRICS New Development Bank“, Dmitriev said.
The Chinese regulator has cracked down on the use of bitcoins in China, and has banned the use of cryptocurrency crowdfunding methods, leading to a global slump in the price of the digital coin this week. China also announced a regulatory clampdown on initial coin offerings (ICOs). Many new startups in China have been relying on ICOs as a means to raise funds by selling off new digital tokens to the market, partly as they find it hard to borrow money from China’s state-owned banks, who are essentially wedded to China’s state-owned companies and find it hard to support small businesses, a continuing entrepreneurial issue in China. There is demand – total ICO investments in China have reached over US$1.2 billion.
Russia’s President Putin has also called for more regulation in the cryptocurrency market, although Russia has also been exploring plans to launch the Kryptoruble.
“Using cryptocurrencies as settlement tools amongst trading blocs makes a lot of sense”, says Chris Devonshire-Ellis of Dezan Shira & Associates. “The currency can be jointly regulated and managed and if necessary, used purely as a government, rather than private sector tool, alleviating security concerns. There is growing demand for less dependence on the US dollar and its cumbersome, political, and expensive trading infrastructure. We will see an alternative currency develop and I foresee several cryptocurrencies being issued within trade blocs in the future, with ASEAN being a primary example of a need for this sort of settlement tool.”
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