The IMF Warns Russian Sanctions Could Increase The Usage Of Crypto And Weaken The Dollar’s Dominance.

As Russia’s invasion of Ukraine enters its second month, the senior International Monetary Fund (IMF) official has warned that the financial sanctions put on the invading country, including limits on its central bank, might have far-reaching consequences for currencies.

The IMF’s first deputy managing director, Gita Gopinath, says there are signs that some nations have begun “renegotiating the currency in which they are paid for trade.”

“The dollar would remain the major global currency even in that landscape, but fragmentation at a smaller level is certainly quite possible,”

Gita Gopinath explains

According to Gopinath, the current situation could impact the overall adoption of currencies other than the US dollar, such as stablecoins and central bank digital currencies (CBDCs). She also warned about the lack of regulation surrounding cryptocurrencies, emphasizing the importance of addressing this issue before their widespread adoption:

“All of these will get even greater attention following the recent episodes, which draws us to the question of international regulation. There is a gap to be filled there,” 

The crypto market reacted with an immediate sell-off on February 24, the day Russian forces entered Ukraine in a “special military operation,” resulting in losses of more than $500 million. With more than 90% of Bitcoin (BTC) in circulation, the inflation rate fell to 1.7% in March, five times lower than the US dollar, presenting BTC as a potential inflation hedge for investors.

As a result, the market has made a stunning comeback, with the price of Bitcoin, its flagship asset, marching in an upward trend, growing as much as 35% since the beginning of the invasion and pushing the expansion of the market’s capitalization, which now stands at $2.12 trillion.

It’s worth noting that cryptocurrencies have proven useful in getting support for the invading people and their army. Donations made in the cryptocurrency have recently reached $100 million.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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