In Vietnam, a software developer bills his client in Singapore and is paid in bitcoin. This transaction sidesteps a costly banking system and the miserly official exchange rate of Vietnamese banks. In Indonesia, a doctor places his savings into an exchange-traded fund that invests in multiple cryptocurrencies. The truth is, Vietnam has the world’s highest rate of cryptocurrency adoption and that is primarily due to the tendency of individuals and businesses there to transact, trade and invest in bitcoin and similar other cryptos.
While advanced economies tell people to eye cryptos with suspicion and call it highly volatile and speculative farse that will have a sticky end, people in Southeast Asia and Africa are benefiting from cryptocurrencies tremendously. But how long will these advanced economies or global countries continue to shy away from the crypto world? The answer to that question is surprisingly simple:
UK Government’s interest in stablecoins and NFT
Yes, global countries are now quickly adopting cryptocurrencies. They are even making their digital currencies and bending their regulations to ensure worldwide adoption. Earlier this year, the UK Government announced that it plans to see stablecoins recognized as a valid form of payment. It also revealed that the government plans to introduce a financial market infrastructure sandbox and establish a Cryptoasset Engagement Group so it could work closely with the crypto industry. Even the Royal Mint was reported to be working with the government to launch a Non-Fungible Token (NFT) that would become a clear testament to the UK’s progressive approach towards modern technology.
What are stablecoins?
If you are wondering about stablecoins here are some details. Stablecoins are digital currencies just like bitcoin but they are pegged to a fiat currency such as the US Dollar. This allows stablecoins to maintain a stable value. This stability makes them distinct from unpegged cryptocurrencies which are the most volatile and have their values strongly dependent on the sentiments of people. In essence, stablecoins possess the benefits of both the cryptos and the fiats, and it’s probably why some people prefer them over the other cryptos.
Scratching the surface with CBDCs
When talking about stablecoins, how can one leave out Central Bank Digital Currencies (CBDCs)? The best way to explain a CBDC is to call it electronic cash. There is no other way to go about it. Just like the fiat currencies, a CBDC gives its possessor a direct claim on the central bank. It also organizations and people, in general, to easily make electronic transfers and payments. A CBDS also cuts out the middlemen in financial transactions. These are primarily banks. This eliminates risks to the consumers in the case a commercial bank collapses and facilitates a direct connection between the central bank and the consumers.
Countries where CBDCs have been launched
You would be surprised to see the small number of countries that have launched CBDCs and the reasons behind those launches.
The Bahamas
Launched in October 2020, the Sand Dollar was the first nationwide CBDC in the world. In the Bahamas, it is not profitable for commercial actors to operate in all areas. There are so many islands, you see. This is why there are parts of the population in the country that couldn’t access financial services. It was estimated that 20% of the country’s population didn’t have a bank account. To address this, the government launched Sand Dollar to improve financial inclusion.
Nigeria
Nigeria was the first country in Africa to launch a CBDC called eNaira. Nigeria’s population is around 219 million and 90% of these have smartphones. The government launched the eNaira which could be stored in a digital wallet and accessed from a smartphone. This allows Nigerians to conduct contactless in-store payments and easily transfer money to each other.
Eastern Caribbean Currency Union
Some countries in the Caribbean joined together and created their form of digital currency. The move was carried out to help speed transactions and also assist people without bank accounts. Seven countries joined this union, (Antigua and Barbuda, Grenada, Dominica, Montserrat, Saint Lucia, St. Kitts and Nevis, and St. Vincent and the Grenadines.) The currency was blockchain-based and called DCash.
Sweden
Sweden is still testing its digital currency which goes by the name of e-krona. Sweden’s Riksbank has a proof of concept with this currency and says that it continues to explore the technological and other governing implications of its CBDC. Once done, Sweden plans to ensure global access to the e-krona. The biggest hurdle so far has been the elderly community whose interests the government wants to safeguard. They want to ensure that the elderly and people with disabilities aren’t affected in a cashless society.
China
China piloted its digital currency in April 2020 and called it e-CNY. The People’s Bank of China planned to make it ready for domestic use by 2022. So far, the digital yuan is still in incubation. Reports were saying that digital yuan payment services were offered to people visiting the Beijing Winter Olympics. Visitors were allowed to download the digital yuan wallet app and even store their digital currency on a physical card.
Jamaica
Andrew Holness, Prime Minister of Jamaica confirmed that the Bank of Jamaica will launch a digital currency this year. They had a successful pilot of the digital Jamaican dollar in 2021, already. The main aim behind this launch is financial inclusion and to speed up digital transactions and remittances. The pilot project saw the successful minting of J$230 million (€1.28 million) worth of digital currency. It was also tested by 57 people who conducted people-to-people transactions with small businesses.
Finance plays a major role in wars. But we saw something unique there. It was the emergency of cryptocurrencies with many people calling it the world’s first crypto war. On one hand, Ukrainians are getting help in the form of tens of millions of dollars in cryptocurrency. While they use it to fight Russian troops, the USA finds itself busy stopping Russia from using cryptocurrencies to bypass its sanctions.
Despite US best efforts, a massive $4 million worth of cryptocurrency has been transferred to groups supporting Russia’s military in Ukraine. These numbers are just what was found out by the investigators and the actual number is still under discussion. The information was released by WIRED.
Canadian Freedom Convoy Story
Looking over at the other side, where people were supporting Ukraine, the Canadian Freedom Convoy tried to raise money for the people in Ukraine and started a fundraising campaign on the GoFundMe platform. They did quite well and managed to raise a good number of donations, but then the social funding platform seized approximately $10 million in donations. The website said that the movement promoted violence and harassment.
Ukraine Accepts Donations in Cryptos
No war can be fought without money. Ukraine knew it too well. She also knew her friends won’t be there to support her openly. There was only one thing left to do. Turn to the only savior in such situations. The Crypto World. To amass as much financial support as possible, the Kyiv government started accepting donations in cryptocurrency and it enabled them to get significant financial support fairly quickly.
Interestingly, with a single tweet saying, ‘now accepting cryptocurrency donations,’ Ukraine was able to amass $12 million worth of Bitcoin, Ethereum, and USDT in just two days! The numbers didn’t stop there. It was reported that more than US$100 million were raised this way. Two funds were set up. One was for the military and the other was for humanitarian aid. But then the Ukrainian leadership thought that saving people wasn’t important enough and merged the funds to support the Ukrainian military for further violence.
Surprisingly, the government saw the amount received in cryptocurrency as a modest number as it got a lot more from international agencies later on. But the speed at which the funds were transferred using cryptocurrency was staggering. And the world also realized that funds can be transferred fast without intermediaries. Ukraine saw that while bank transfers took several days to arrive, the cryptocurrency was deposited within a few minutes. It was an undeniable demonstration of the usefulness of cryptocurrency.
The Russian side of the war
Russia has oil and gas. It’s the same oil and gas that was used in the entire of Europe. The US was quick to impose sanctions. But the US never used Russian oil and gas. Its supporters did. And it didn’t end well for them. The unprecedented sanctions levied on Russia did little effect. Russian actors used cryptocurrencies to bypass those sanctions. Russia even refused to use USD as a trading currency and started selling its natural resources in its currency. It worked for them and the US couldn’t do much.
On the other side, the policymakers were desperately trying to regulate digital assets. President Biden signed an executive order that called for a whole-of-government strategy on digital assets. The strategy also included ways to mitigate national security risks. On the European front, the parliament found itself debating whether it should impose energy-use standards on cryptocurrencies. It could only limit some of the cryptos and wasn’t seen as very effective.
In all this, the prominence of blockchain cannot be denied. Crypto can influence global perceptions of the technology, and help people fight and navigate the effects of wars. Observing this, global countries including the progressive ones are considering new regulations.
Russia removes dollar assets from its wealth funds
In June, it was announced that Russia was cutting the U.S Dollar from its $186 billion National Wealth Fund. The announcement came as Washington continued to impose tougher sanctions on Moscow. The NWF will get rid of the USD and instead invest in gold, Chinese Yuan, and Euro assets. Once the changes to NWF are complete, the euro assets will account for 40% of the NWF while the Chinese yuan will amount to 30% and gold only 20%. The remaining 10% will see the accumulation of the British Pound and the Japanese yen.
While many financial experts saw this as a careful planning tactic to evade more strict sanctions that were anticipated by Russia, the Moscow government said that it was a clear message to the US that the Russian economy can do without the US dollar and they are not vulnerable to US sanctions anymore. The new sanctions have stopped Russians from trading the usual way and they are now quickly turning to cryptos to conduct transactions the usual way.
About us.
FA Global BK Finance is a Fintech company, founded in 2011 as a consultancy on one core simple belief: improving borderless technology by giving access to ID & financial inclusion. 2020 Our foundation consistently has grown from legacy 2.0 and merged 3.0 applications products and blockchain services.
As a disclaimer, This article explores company updates only, new technologies like payments NFTs and cryptocurrencies, and the potential uses for artists and creators. This is for informational purposes only. It is not offered or intended to be used as legal, investment, financial, or other advice.
