Middle East-driven De-dollarization Accelerates... Blockchain Payment Networks and BRICS Emerge

▲ BRICS, Dollar (USD), Bitcoin (BTC)/AI-generated image

An analysis suggests that the US dollar's status as a global reserve currency faces a structural challenge, driven by the proliferation of blockchain-based payment infrastructure and geopolitical tensions in the Middle East.

Crypto-focused channel Coin Bureau diagnosed in a video released on April 10 (local time) that new international financial infrastructure is rapidly being built while Western countries focus on responding to geopolitical risks. The existing international payment network, the Society for Worldwide Interbank Financial Telecommunication (SWIFT), has long operated under US influence and has virtually been used as a tool for financial sanctions. However, an assessment suggests that trust has been fractured since the freezing of approximately $300 billion in Russian assets in 2022.

Amidst this trend, BRICS is building 'BRICS Pay,' which directly connects payment networks between member states instead of introducing a single currency. This system operates without central control, based on blockchain technology, and allows for immediate payments in local currencies without the need for dollar exchange procedures.

Geopolitical tensions in the Middle East are acting as a key factor accelerating the de-dollarization trend. Notably, some ships passing through the Strait of Hormuz are paying transit fees with digital assets like the Yuan or Tether (USDT) instead of the traditional dollar. Consequently, signs of structural change are also being detected in the petrodollar system, which has been maintained based on crude oil transactions.

BRICS is expanding its influence by increasing the participation of major oil-producing countries such as Saudi Arabia and the United Arab Emirates. Cross-border transactions worth tens of billions of dollars are reportedly already being processed through the multi-central bank digital currency platform mBridge. Some transactions are settled primarily in digital Yuan, continuing the trend of reducing dollar dependence.

The US fiscal situation is also cited as a burden. Federal debt has exceeded $38 trillion, and annual interest costs are topping $1 trillion, increasing fiscal pressure. Furthermore, with China showing moves to reduce its holdings of US Treasury bonds, changes in market supply and demand structure are also being observed.

Concurrently, global central banks are accelerating the diversification of reserve assets. An analysis indicates that cracks are forming in the existing dollar-centric financial order, as increased gold holdings and the introduction of digital payment infrastructure proceed in parallel.

Experts believe that de-dollarization has moved beyond mere policy slogans and entered a phase of implementation as actual payment infrastructure. If the proportion of blockchain-based payment networks in international trade expands, structural changes across the global financial system are expected to be inevitable.

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