Russia’s Use of Cryptocurrencies to Counter Western Sanctions
Russia is actively leveraging Bitcoin and other cryptocurrencies to mitigate the impact of Western sanctions on its economy, as reported by Reuters on Dec. 25.
Bitcoin in International Transactions
Finance Minister Anton Siluanov revealed that Russian companies are utilizing digital currencies, especially Bitcoin mined within the country, for international transactions. Siluanov stated:
“As part of the experimental regime, it is possible to use bitcoins, which we had mined here in Russia (in foreign trade transactions). Such transactions are already occurring.”
Role of Stablecoins
In addition to Bitcoin, Chainalysis highlighted the role of stablecoins like USDT and USDC in Russia’s international trade. While these digital assets offer high liquidity, their centralized control may hinder broader adoption.
Reasons Behind Russia’s Crypto Adoption
Western sanctions imposed on Russia following its actions in Ukraine have significantly limited Russian firms’ access to international trade through traditional banking systems. This has prompted Russia to explore alternative solutions, with cryptocurrencies emerging as a viable option.
In July, Russian legislators passed a law allowing the use of digital currencies in cross-border trade. By November, President Vladimir Putin formalized legislation categorizing cryptocurrencies as property for foreign trade purposes, introducing tax incentives for digital transactions and exempting crypto mining and sales from VAT.
Putin has expressed support for digital currencies, emphasizing their role in enhancing economic efficiency and stability. Siluanov believes that crypto adoption in international trade will continue to grow, providing Russian companies with greater flexibility in global markets.
“We believe they should be expanded and developed further. I am confident this will happen next year.”
Despite these advancements, Russia faces limitations in crypto adoption, such as a planned six-year mining ban in energy-strapped regions starting in January 2025 to address energy concerns.
Author
Assad Jafri
AJ, a passionate journalist with over a decade of experience, specializes in financial journalism and now focuses on crypto reporting.
