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US Congress Acts Seize Russian Assets, Experts Predict De-Dollarization Surge

Last Updated April 23, 2024 12:47 PM
Teuta Franjkovic
Last Updated April 23, 2024 12:47 PM
By Teuta Franjkovic
Verified by Peter Henn

Key Takeaways

  • The U.S. House’s approval of the REPO Act, allowing for the seizure of Russian assets, has raised concerns.
  • US think tanks warn REPO Act could weaken the dollar and set a bad precedent.
  • The BRICS bloc, led by Russian initiatives, is considering the use of stablecoins and CBDCs for its payment systems.

Analysts are evaluating the implications of the United States House of Representatives recent approval of the Rebuilding Economic Prosperity and Opportunity (REPO) Act .

The act will seize over $6 billion of Russian assets held in American institutions. This move could, potentially, intensify de-dollarization efforts among various nations. Meanwhile, could stablecoins point the way forward?

US Asset Seizure Fears Fuel De-Dollarization Concerns

This acceleration stems from concerns that their assets could also be seized in response to any discord with US policies. The recent approval of the Rebuilding Economic Prosperity and Opportunity (REPO) Act  has raised concerns among experts.

Paul Goncharoff, chief manager of Goncharoff LLC., said  that such measures would be seen by other countries as coercive. He went on to liken them to “pure blackmail.” He also said a currency’s stability is undermined if holders cannot control their assets, stressing that this situation encourages nations to move away from the dollar.

Goncharoff stated :

“It just supercharges de-dollarization. And that’s not good, especially when you have an America that is used to living on larger and larger debt raised by people placing the trust and buying treasuries and bonds.”

Russia Makes Digital Ruble Official in Tax Code

Last year, Vladimir Putin signed legislation formalizing the integration of Russia’s digital ruble into the national tax code.

The tax code now includes a definition of a “digital ruble account”. It also establishes rules for the taxation of transactions conducted with digital rubles.

This move is part of Russia‘s ongoing efforts to advance its digital ruble project, initiated by the Bank of Russia in 2020. The development of this central bank digital currency (CBDC) is partly aimed at circumventing financial restrictions . These include sanctions imposed due to Russia’s actions against Ukraine. President Putin officially endorsed the digital ruble bill in July.

US Think Tanks Warn REPO Act Could Cripple Dollar

There are also domestic concerns about the REPO Act and its potential effects.

The Heritage Foundation, a conservative and Republican-leaning think tank, has issued warnings about the risks associated with granting such significant powers to the Biden administration. They caution that this could set a precarious precedent for future governmental actions.

In a recent report , the Heritage Foundation highlighted that although the intentions behind REPO are valid, its enactment could jeopardize the dollar-denominated global financial system, prompt de-dollarization, and introduce risks to an already unstable economy.

BRICS Eyes Stablecoins for Payments System

In a recent development, Russian Deputy Foreign Minister Sergey Ryabkov disclosed that the BRICS bloc is exploring the adoption of stablecoins for its common rail payment systems.

Ryabkov also mentioned  that the potential use of stablecoins and integration of Central Bank Digital Currencies (CBDCs) from the bloc’s member countries could become part of the organization’s broader integration efforts.

The discussion about incorporating central bank digital currencies (CBDCs) into a new settlements system has been a recurring topic  among Russian officials. However the recent mention of stablecoins is one of the first times they have been explicitly identified as potential tools for this purpose. Stablecoins are typically pegged to the value of assets such as the US dollar, gold, or other commodities. They could, therefore, offer stability and reliability in cross-border transactions within the BRICS bloc.

Deputy Foreign Minister Sergey Ryabkov also said more traditional methods could enhance financial cooperation among BRICS nations.

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