When it comes to bitcoin and cryptocurrencies, Russia has so far exhibited a love-hate relationship. Now it appears Russia may have a new use for cryptocurrency – avoiding international economic sanctions.
Mixed Feelings So Far
On one hand, President Vladimir Putin has offered general support for cryptocurrency, and laid the grounds for its respective mining and taxing (due by mid-2018).
Putin has even announced plans for what’s being called the “CryptoRuble,” a digital version of the nation’s currency and arguably one of the first state-created digital coins, to further launch the country’s financial sector.
On the other hand, skepticism amongst policy-makers and leaders remains, with Deputy Finance Minister Aleksey Moiseev suggesting last week that mining cryptocurrencies be punishable by law:
“The penalties will be different, mostly administrative, but if someone created the cryptocurrency for settlements, then there will be a criminal punishment.”
New Currency Could Reduce Dependence on USD
Russia has suffered penalties of its own. Recent U.S.-led sanctions have hit the country’s oil trade relatively hard, along with other oil-producing nations in Asia and South America like Iran and Venezuela. Some are beginning to wonder if Russia could turn to bitcoin and cryptocurrency in the future, and begin using it over USD to trade crude oil, thus avoiding trouble down the line while building prosperity.
Switching to Crypto Could Really Work for Russia
As an oil analyst at city broker PVM Oil, Stephen Brennock explained that the rise of cryptocurrencies could potentially assist countries trying to decrease their dependency on the U.S. dollar. Speaking with CNBC, he stated:
“The advent of cryptocurrencies represents a fresh catalyst for commodity-producing countries wishing to abandon the dollar as a means of payment for oil.”
Additionally, financial commentator Jim Rogers claimed that for less-developed nations, the disadvantages of using USD can be quite staggering:
“Many people do not like using US dollars because if the US gets angry at you, they just set enormous pressure on you that can even get you out of business. China, Russia and other countries understand this, and they are trying to move world trade and world finance away from that.”
Getting the Process Started
Countries like Iran have already begun exploring alternate payment methods. The word recently got out that Iran was reading up on bitcoin and its respective technology in the hopes that it could somehow implement widespread use and taxation to avoid falling behind in the digital arena.
Meanwhile, Venezuela has already announced plans to create the “petro,” its own national cryptocurrency and one of the first to be backed by a country’s official resource reserves. China has also suggested the “petro-yuan,” another currency that could allow it to step away from USD very soon.
At press time, Russian law does not allow bitcoin mining and selling, though this could potentially change as the U.S. continues to dig its claws deeper into Russia’s oil supply. The country is slated to produce state-backed regulations for cryptocurrency by July of 2018.
Could Russia benefit by embracing cryptocurrency? Post your comments below.
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