Russia and UAE Accelerate Crypto Adoption, UK Hesitates, Tests wCBDCs – Is Crypto the New Battlefield for Political Power?

• Russia is pushing for new crypto laws following international financial sanctions and high inflation rates.
• The UAE is allowing residents to trade $BTC and $ETHto strengthen its financial standing.
• The UK is conductingwholesale central bank digital currency (wCBDC) tests before adoption, choosing a more cautious approach to crypto.
• Russia's, the UAE's, and the UK's newly adopted crypto strategies highlights crypto's value in global politics.

While Russia and the UAEstrengthen their pro-crypto stances, the UK is more cautious with its progress in the digital currency arena.

Russia is redoubling its crypto regulatory effortsin response to worldwide sanctions, and the UAE has begun accepting crypto trades.

Meanwhile, the UK is showing more skepticism by experimenting with wCBDCs ahead of potential adoption.

Let's explore how crypto may be the new battlefield for political power due to helping overcome financial constraints and economic pressure.

Russia Turns to Crypto to Overcome Financial Blockades

In response to the war-related international sanctions, Russia is drafting new crypto laws to overcome financial blockades.

Since the Russia-Ukrainian war broke out, numerous organizations worldwide have issued bans on Russian bank accounts, including the UK, the US, Canada, and the EU.Russia also has the highest yearly inflation rate, increasing by 3.87% since June, which worsens the country's financial state.

Subsequently, the State Duma (Russia's lower house of parliament) is reviewing legislation to regulate digital assets and crypto mining, despite Putin's warning of Bitcoin mining energy issues two weeks ago.

The revised policies represent a significant shift for Russia, as it's significantly more challenging for Western regulators to track crypto transactions. This makes it easier for Russia to acquire banned goods on the international market, such as steel and coal products.

UAE Residents Can Now Trade $BTC & $ETH

The UAE is also strengthening its crypto position by allowing its residents to trade $BTC and $ETH directlyon the M2 crypto exchange.

M2, which the Financial Services Regulatory Authority licenses, enables UAE institutional and retail investors to buy, sell, and hold crypto while earning yields of up to 10.5%.

Additionally, M2's spot market allows direct conversion of the UAE's dirhams into $BTC and $ETH, and UAE residents will enjoy zero trading fees until August 31.

Exciting News!

To celebrate the launch of our AED deposits and withdrawals, we're kicking off with Zero Trading Fees on AED-Bitcoin and AED-Ethereum pairs

Exclusive offer for UAE Residents until August 31st. Don't miss out: https://t.co/UyeAIKoPxl#ZeroFees #M2 pic.twitter.com/cO5ZlMdn56

- M2 (@M2Exchange) July 31, 2024

Allowing UAE residents to trade crypto, offering regulatory assurances, appealing financial returns, and attractive cost savings will likely strengthen the nation's position as a crypto-friendly hub.

The UK's wCBDC Experiments to Improve Banking

The UK is also strengthening its crypto stance but takes a more skeptical approach.

Over the next six months, the Bank of England (BoE) is conducting three wCBDC tests, as highlighted in its discussion paper:

1. Delivery-versus-payment (DvP) experiments evaluate how effectively wCBDCs transfer funds in securities transactions and expand the range of digital assets and complex transaction structures in the DvP model.
2. Payment-versus-payment (PvP) experimentsleverage wCBDCs' synchronization features to address foreign exchange transaction risks by exploring international transactions and settlements across two currencies.
3. Multi-currency and multi-asset platform experimentstest the ability of wCBDCs to handle intricate, multi-faceted financial transactions.

These initiatives are part of a larger effort to upgrade the bank's current system (CHAPS), which encountered technical issues earlier this month.

Our Verdict - Russia May Adopt a $BTC Strategic Reserve

Russia's, the UAE's, and the UK's diverse approach toward crypto shows the importance of digital assets in global economic strategies and politics.

Crypto has much to offer, especially in international financial flexibility. As more nations adopt digital currencies, their role in bypassing traditional financial barriers (and even sanctions) becomes more apparent.

Additionally, Russia's dire financial challenges suggest the country may adopt $BTC as a strategic reserve before the US because it needs a long-term solution to overcome the sanctions.

Other countries may follow suit and adopt crypto, especially those watching these crypto developments and facing geopolitical or economic pressure.

References

Click to expand and view references

• Countries by Inflation Rate, 2024 (StatBureau)
• Putin Warns of Blackouts From Uncontrolled' Crypto Mining (The Moscow Times)
• The Bank of England's Approach to Innovation in Money and Payments (Bank of England)
• What is Foreign Exchange Risk? (tipalti)
• CHAPS Payments Issue Update (Bank of England)
• Russia Import and Export Bans (European Commission)
• Russia Sanctions: Guidance (GOV.UK)

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