The Shift Away from the US Dollar: How BRICS Nations and Cryptocurrencies Are Winning and Losing
Exploring the growing trend of nations shifting away from the US dollar and its impact on the crypto industry and the global economy.
CEX.IO, a cryptocurrency exchange, has announced that it will sunset its deposit and withdrawal features for USD, effective 12 PM ET on April 3, 2023. This move comes as a proactive measure to restructure the user experience and secure the accessibility of the product ecosystem amid the current uncertainty surrounding the U.S. banking system.
By decoupling from U.S. banking rails, users will no longer be exposed to the potential hazards of having balances held in fiat currency. However, users will still be able to use USD to instantly buy digital assets. CEX.IO encourages the closure of all open Exchange orders before the deadline, as any orders that remain open afterward will be automatically canceled. All funds will continue to be available and accessible to users throughout the process. Digital asset functionality throughout the CEX.IO ecosystem will be unaffected.
Shift Away from US Dollar
The rise of the BRICS nations (Brazil, Russia, India, China, and South Africa) has led to a shift in the global economy, impacting the crypto industry. These nations have abandoned the use of the US dollar for trade and are increasing their economic cooperation, reducing the demand for the US dollar. The shift away from the US dollar could lead to higher interest rates and inflation in the US economy. Decentralized finance, which is beyond the control of governments, may be a savior in this situation. However, there is concern about how US crypto investors will survive the increased government crackdown on cryptocurrencies.
Nonetheless, the crypto industry stands to benefit from these global developments, with BTC and Ethereum prices rising.
Russian President Putin has endorsed the Chinese yuan as the preferred currency for international trade with Asian, African, and Latin American countries.
Proactive Uncertainty Surrounding US Banking System
This move is part of Putin’s effort to reduce Russia’s reliance on the dollar, which has been hampered by sanctions from the West since the 2022 invasion of Ukraine. The proportion of foreign currency in Russian banks has fallen to 15%, and yuan payments have increased by 32%, while dollar and euro payments have fallen by 52% and 24%, respectively.
However, the dominance of the dollar as the global reserve currency is still absolute. While there are growing concerns that its position may be eroding, the IMF’s assessment in 2022 showed that the dollar’s share of global trade was decreasing but still retained the top spot.
Despite the recent strengthening of the dollar against other major currencies due to inflation, its position as the reserve currency is not necessarily doing the same. Russia and China’s efforts will continue to try and erode the dollar’s status, but the dollar has remained the king of global reserve currency so far.
The announcement by CEX.IO is a proactive measure, considering the uncertainty surrounding the US banking system, which is being impacted by the shift away from the dollar. The move is intended to restructure the user experience and secure the accessibility of the product ecosystem, and while it is disruptive for users, it may be beneficial in the long run. CEX.IO assures its customers that their wealth is theirs and the move is aimed at insulating the CEX.IO community from disruptive and potentially negative outcomes.
In conclusion, the shift away from the US dollar is a growing trend, and while it may lead to higher interest rates and inflation in the US economy, decentralized finance could be a savior. The rise of the BRICS nations and their efforts to abandon the use of the dollar for trade could be beneficial to the crypto industry, which has seen the prices of BTC and Ethereum rise. The move by CEX.IO to sunset its deposit and withdrawal features for USD is a proactive measure to restructure the user experience and secure the accessibility of the product ecosystem amid the current uncertainty surrounding the U.S. banking system.
