Here’s Why Trump Threatening Iraq of Losing Their Oil Reserves is Bullish for Bitcoin
- The US killed top Iranian general in Iraq, Iraq wants to remove US troops from the country, US warns of more sanctions and holds their money hostage
- The weaponization of fiat currencies and central banks would push people to start adopting Bitcoin
Iraq could lose access to its critical government bank account if they kick out American forces, warns Trump administration according to Iraqi officials. The reports came after US airstrike killed a top Iranian general, Qassem Soleimani at Baghdad International Airport.
The Iraqi parliament than on Sunday voted to urge Prime Minister Adel Abdul-Mahdi to remove about 5,300 US troops.
In response, President Trump has threatened to place economic sanctions on Iraq which would also extend to Iran. He could also end waivers that allow Iraq to buy Iranian gas to fuel its generators that supply the country's most of the power.
The White House is putting a lot of pressure on the prime minister over addressing US troops without enduring financial and economic loss.
However, Mahdi argues, they can only avoid conflict in Iraq by forcing out American troops. He was warned about the central bank account in a call on Wednesday, an Iraqi official told the Wall Street Journal.
A Jolt to Iraq’s Shaky Economy
The State Department warned that the US could shut down Iraq’s access to the country's central bank account, where its international oil sales revenue is kept, at the Federal Reserve Bank of New York.
Such a move could create a cash crunch in Iraq’s financial system and jolt its already shaky economy, the officials said.
Like other countries, Iraq maintains its government accounts at the New York Fed. According to the Central Bank of Iraq's most recent financial statement, the Fed held about $3 billion in overnight deposits at the end of 2018.
Restricting the access to dollars could cause a fall in the value of Iraq’s currency dinar, as it did in 2015. This can then trigger a run for dollars in Iraq in an attempt to secure hard cash by people, companies, and banks and cause broader economic woes.
Pushing People to Adopt Bitcoin
Crypto commentators believe this to be a positive thing for Bitcoin. Gabor Gurbacs, digital asset strategist at VanEck said
“The weaponization of fiat currencies, payment railways and central banks continue during conflicts and everyday life. It’s only matter of time people start adopting independent, apolitical, non-sovereign monies and payment railways, such as Bitcoin.”
Buy Bitcoin. https://t.co/NjO7n5ak0K
— CO฿IE (@CryptoCobain) January 12, 2020
“Not your keys, not your oil revenue,” says Samson Mow, CSO of Blockstream, adding, “Bullish news for Bitcoin. Gold just leads to more of the same problem. Remember the Venezuelan gold stuck in the Bank of England?”
Last year, US lobbied UK officials to deny Nicolas Maduro’s request to withdraw $1.2 billion worth of gold out of the Bank of England.
In the face of hyperinflation, economic and political crisis, Venezuela has taken to cryptocurrencies. Not only Maduro launched Petro but also has Bitcoin stash as US sanctions limit access to dollars. It is possible that Iraq resorts to Bitcoin and cryptocurrencies as well.