The Death of Dollar-Denominated Diplomacy?

ICOBox head of International PR Dima Zaitsev on the role of cryptocurrencies in increasingly chaotic international diplomacy

With news that the US has expanded its list of Russian organizations and individuals subject to sanctions, cryptocurrencies are in the spotlight for the role they can play in providing stability in moments of crisis.

The latest sanctions come after Microsoft claimed it had thwarted Russian attempts to launch cyber-attacks against US conservative groups. The US Treasury’s additional sanctions are reportedly against two Russian shipping companies it suspects of trading with North Korea.

These moves by the US authorities, critics allege, amount to abuse of the US dollar’s position as the world’s reserve currency and this requires alternative global financial infrastructures to be developed. These comments do not come from any type of “crypto radical” but rather from the German Finance Minister who this week called for the creation of a new payments system not reliant on the US. Heiko Maas said Europe should not allow the US to act “over our heads and at our expense” in its increasingly regular use of financial sanctions.

Financial sanctions date back as far as the Peloponnesian war, when Athens tried to block merchants allied to Sparta. In modern history, Cuba has been under economic blockade since 1960 but use of sanctions has really accelerated since the 9/11 terror attacks. As it stands, the US Treasury is one of the world’s most powerful geopolitical bodies and this is leading to questions about the desirability of the US dollar as the backbone of the international financial system. Cryptocurrencies have a strong role to play in keeping the cogs of global payments moving in times of political tension.

The clearest recent evidence of cryptocurrencies’ role in times of economic crisis comes from Venezuela where the state authorities are seeking to create a national cryptocurrency to combat skyrocketing inflation.