A Russian expert says the BRICS initiative could affect global crypto markets in the first place, in the sense of stablecoins, with Bitcoin’s popularity likely to remain high. According to Fedor Ivanov, Director of Analytics at Shard, the proposed BRICS Bridge platform could decrease the demand for some digital assets.
Though the rules may change, Ivanov believes Bitcoin and other high-cap cryptocurrencies will continue to appeal to investors looking for decentralized options.
BRICS Digital Currency Plan Threatens Stablecoins
At the BRICS summit in Kazan, Russia, the nations unveiled the BRICS Bridge platform. This initiative aims to build a cross-border payment system using a combination of wholesale Central Bank Digital Currencies (CMDCs) and blockchain technology. According to leaders, the platform will help make international payments cheaper without intermediaries for BRICS member states.
The BRICS Bridge is envisioned to let member nations trade without using the SWIFT messaging system and reduce dollar reliance. If this shift takes hold, it could mean a major change in how international trade is conducted—even among countries in the so-called ‘BRICS’ group. The adoption of CBDCs could also broadly affect the crypto market as these nations adopt alternatives to traditional banking systems.
Such developments could severely hit the stablecoin market, notes Fedor Ivanov.
“If cross-border settlements start using CBDCs, this could reduce the demand for stablecoins like USDT,” he said.
Ivanov says stablecoins have become increasingly popular as a medium of trade in places like Russia, Venezuela, and others. However, he added, they could lose their popularity once other countries roll out their digital money.
Tether Faces Competition from BRICS Digital Currencies
Tether (USDT), stablecoins, has become the most dominant force in global crypto trading because of its price stability and ease of use. By Ivanov’s estimate, demand for USDT spiked in November 2024, when Tether had to print 12 billion tokens to keep up with the pack. While some of this demand is likely due to the runup in Bitcoin’s price, Ivanov thinks USDT is being used for other purposes beyond Bitcoin trading, some of which include usage in Venezuela and Iran.
However, the possible launch of CBDC by BRICS nations can change stablecoin preferences. Ivanov argued that these state-backed digital currencies would be more secure and regulated alternatives to stablecoins. He predicts that countries still actively pursuing CBDC projects, like China, Russia, and India, may deliberately focus their digital currency on international trade to reduce reliance on private stablecoins.
According to the expert, CBDCs could also prevent certain risks associated with stablecoins, where money could be frozen for political reasons. Indeed, as governments experiment with their digital currencies, users will be incentivized to migrate to these centrally regulated options rather than these decentralized stablecoins. Stablecoins could eventually lose some appeal to traders and governments, a change that could shift the crypto market.
Bitcoin May Stay Strong Amid CBDC Rise
While the potential rise of CBDCs could topple them off the top among cryptos, Bitcoin might remain strong in the short term. Ivanov says cryptocurrencies like Bitcoin that carry a high cap are most likely to attract investors looking for a decentralized solution. Especially in the BRICS countries, Bitcoin is viewed as a hedge against inflation and currency devaluation, two essential elements in many economies.
While CBDCs are introduced, Bitcoin’s decentralized nature may still entice those who want their financial transactions to be private and autonomous. However, Ivanov also states that while digital fiats could be adopted, they will likely be met with demand from the global crypto market, which is looking for assets like Bitcoin.
“For decentralized solutions, Bitcoin will remain attractive,” he said, noting that the asset’s value proposition isn’t tied to the policies of any central bank.
But, warned Ivanov, CBDCs adopted everywhere could alter the crypto landscape. However, demand may shift in the market if large economies start to prefer their digital currencies over assets not backed by a central authority. Nonetheless, for now, Bitcoin looks set to retain its dominance in the crypto market until CBDCs become a commonality with the BRICS nations and other global audiences in an outsized fashion.
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