- Russia said that it’s ready to accept Bitcoin payments from its ‘friendly’ trade partners against oil and gas exports.
- Some analysts believe that Russia is taking a risky bet considering Bitcoin is subject to high volatility.
After facing strong sanctions from the Western Countries over its invasion of Ukraine, Russia is now considering the option to accept payments in Bitcoin against the sale of its oil and gas. On Thursday, March 24, the chair of Russia’s Duma Committee on energy, Pavel Zavalny, said that “Friendly” countries like China and Turkey can pay either in their local currencies or even Bitcoin.
We have been proposing to China for a long time to switch to settlements in national currencies for rubles and yuan. With Turkey, it will be lira and rubles. You can also trade bitcoins,
Amid Western sanctions, Russia has been cut from the global payments system SWIFT. On Thursday, Mr. Zavalny also said that the country is exploring alternative payments for its exports. The recent move shows how Bitcoin is now playing a central role in world geopolitics.
The announcement comes just a day after President Vladimir Putin asked “unfriendly” countries like the U.S, U.K, and Germany to pay in Russian Ruble for its oil exports. This was to boost the strength of the Ruble which has collapsed 40 percent against the USD over the last month.
In his letter to shareholders on Thursday, Blackrock CEO Larry Fink also spoke about the impact of the Russia-Ukraine war on the accelerated use of crypto. Fink wrote:
The Russian invasion of Ukraine has put an end to the globalization we have experienced over the last three decades. A less-discussed aspect of the war is its potential impact on accelerating digital currencies. The war will prompt countries to re-evaluate their currency dependencies.
Is Russia making a risky bet with Bitcoin?
It is for the first time that a government of a big nation-state such as Russia is accepting Bitcoin payments for its exports. However, Russia could be treading a risky path here considering that Bitcoin is highly volatile. David Broadstock, a senior research fellow at the Energy Studies Institute in Singapore told the BBC:
Russia is very quickly feeling the impact of unprecedented sanctions. There is a need to shore up the economy and in many ways, Bitcoin is seen as a high growth asset. Clearly accepting Bitcoin, compared with other traditional currencies, introduces considerably more risk in the trade of natural gas.
He further added that one of Russia’s friendly countries like China has banned Bitcoin altogether. This further limits the potential use of Bitcoin.
Related: Thailand bans crypto payments
Since Russias’s invasion of Ukraine, there have been multiple reports that Russian oligarchs are using crypto to bypass sanctions. The Western regulatory agencies are also looking into this matter. Some of the U.S. lawmakers have asked exchanges to completely ban Russian users.
However, top players like Coinbase have refrained from this idea. Coinbase CEO Brian Armstrong justified his stand saying: “Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed”.