Russia’s finance ministry is looking at the idea of using cryptocurrencies such as Bitcoin to make international payments. According to a Friday report by Interfax, the talks are taking place in an effort to reinvigorate Russia’s economic relationships with international partners, given the country’s restricted ability to use standard payment infrastructure.
Ivan Chebeskov, director of the financial policy department of the Ministry of Finance during the United Russia discussion platform said:
- “The issue of using such digital currencies as barter transactions for international settlements is being actively discussed.”
- “If the digital currency is recognized as property, in principle, within the framework of barter transactions with such digital currency, it will be possible to carry out operations on foreign economic activity.”
Following Russia’s invasion of Ukraine earlier this year, which marked a significant escalation of the Russo-Ukrainian conflict, NATO allies hit Russia with a slew of sanctions. Apart from travel bans and asset freezes, the United States, the European Union, and other allies imposed a slew of financial measures, including shutting off major Russian banks from Swift and phasing out Russian imports. All of this was done in the hopes of damaging the Kremlin and forcing Putin to halt the invasion.
As a result of these efforts, Russia has been steadily expressing interest in using cryptocurrencies to undertake international transactions, despite the fact that its adversaries are pushing for legislation to prevent the country from doing so. “This problem is being explored,” the official continued, “and it appears to me that it merits attention, considering that we have limited settlement options in the regular payment infrastructure.”
Russia is considering accepting Bitcoin or local currencies for oil and gas exports from “friendly” countries, according to Pavel Zalvany, a top politician in the country. “Unfriendly” countries, on the other hand, would be limited to purchasing energy exports in the Ruble. Mr. Zalvany, the leader of the country’s state Duma, stated at the time that the country was looking into alternate methods of foreign financial settlement, with cryptocurrency being a major priority.
While the use of cryptocurrencies for international settlements may help Russia because the majority of them are deemed high-growth assets, experts have warned that there are drawbacks. For one thing, Bitcoin is extremely volatile, which could complicate natural gas commerce; established currencies such as the Euro and the US dollar, on the other hand, are extremely stable.
China, one of Russia’s closest allies, has had its own issues with cryptocurrencies, particularly Bitcoin, and has stated that it will not accept Bitcoin for payment. For fear of retaliation from the international community, other countries may reject Russia’s suggestion to adopt cryptocurrency.
