Cryptocurrencies have quickly become a viable tool for global geopolitics. Recently, countries like Russia, Iran, and Venezuela have turned to these digital assets as a solution to evade sanctions set by the US and other western powers.
For the first time in history, cryptocurrencies are allowing nations to bypass the traditional apparatus of economic warfare: sanctions. These countries, owing to their geopolitical situations, are the first nations to echo the sentiment which is resonated by ardent crypto-enthusiasts; that there is a need to move away from centralized financial models and the global over-dependence on the US dollar.
Here are a few countries that have leveraged cryptocurrencies in their ongoing economic conflicts:
The Trump administration is taking a harder line with Iran than previous administrations. From scrapping the Iran Nuclear Deal, to imposing a more rigorous set of sanctions, Iran’s economy has taken a hit and continues toward new lows.
In a recent statement by Iran’s Central Bank, the authorities clarified that they are in advanced talks with the different domains of legislators to develop means to catalyze the use of cryptocurrencies for daily transactions. The Parliamentary Commission for Economic Affairs of Iran looks at Cryptocurrencies as a substitute for US dollar and SWIFT’s interbank payment system.
This sentiment was supported in the recent statement by Mohammad Reza Purebrahimi, an official of Central Bank of Iran.
“This is one of the good ways to bypass the use of the dollar, as well as the replacement of the SWIFT system. We obliged the Central Bank in Iran to start developing proposals on the use of crypto-currency.”
He added he has already established contact with Russia on the use of cryptocurrencies and Tehran will host a meeting on an interbank working group on financial and institutional cooperation on July 5, 2018.
Russia has also seen international sanctions imposed by the United States and the European Union and a number of other countries in recent years. Not only have they attempted to abolish SWIFT, they are also working on a state cryptocurrency called the Cryptoruble, which will be launched in the second quarter of 2019.
Apart from helping Iran with their cryptocurrency adoption, Russia is involved with the Petro, Venezuela’s Petroleum-backed cryptocurrency.
Venezuela has the largest proven oil reserves in the world. But in the last three years, its economy has collapsed. In desperation, Venezuelan President Nicolas Maduro turned to an emerging asset class in an attempt to kickstart the economy and replace the bolívar, which has suffered from massive devaluation caused by an annual inflation of more than 4,000 percent. Named the Petro, the digital currency is allegedly backed by the country’s oil reserves.
President Trump issued an executive order in March banning U.S. citizens from purchasing the Venezuelan the Petro in an effort to pressure the Maduro’s government. The crypto-sanctions joined previous U.S. sanctions and a debt-purchase ban on Venezuela.
While this digital currency is doomed to fail, largely due to the economic fraud that is rampant and mismanagement of the centralized economy in Venezuela, the attempt has spurred other countries, like Turkey and Iran to launch their own national, debt-free cryptocurrencies.
Cryptocurrencies are quickly becoming a means of undermining established institutions. While the initial intention of crypto was to upend the financial system, it is clear that the ramifications of these digital assets are far more expansive. From ordering pizzas to undercutting superpowers, crypto is changing how the world functions and time will tell where this will all end up.