Russia backtracks on crypto payments

Just days after the outbreak of the conflict in Ukraine, and the launch of the first harsh economic sanctions against Russia, which had invaded the country, a high-ranking politician in the Duma had hinted that the country would also consider accepting cryptocurrency payments in exchange for oil and gas.

Russia: the possibility of accepting Bitcoin

Pavel Zavalny, who heads the Russian parliament’s energy committee, had stated that Russia would also consider the possibility of accepting Bitcoin payments on international transactions.

But many had argued that this type of payment would have a major obstacle from the fact that China, which is a very important trading partner for Russia, especially after the outbreak of the conflict in Ukraine, has banned any activity related to cryptocurrencies. Moreover, the large price fluctuations that occur in cryptocurrency markets make digital currencies much more risky and volatile than the dollar.

In the past few days, Reuters, quoting the Russian news agency Interfax, had reported that the Russian government was opening serious reflection on whether or not to use cryptocurrencies in international transactions.

“The idea of using digital currencies in transactions for international settlements is being actively discussed”,

Ivan Chebeskov, head of the finance ministry’s financial policy department, had told the news agency.

Crypto payments in Russia only for small payments

The discussion has actually been going on for several months, and concerns a broad bill to regulate the entire cryptocurrency sector in Russia, which, due to sanctions imposed by the international community, is becoming an alternative asset for traditional payments.

But now the news seems to be coming from the Russian Ministry of Finance that cryptocurrencies could be used for small payments, but not for payments related to exports of raw materials or other goods. This decision would seem to be the natural consequence of what appears to be a marked change in recent weeks on the part of the Russian authorities towards the world of cryptocurrencies.

At the beginning of June, rumours spread that a bill had been submitted to the Duma to ban cryptocurrencies, following the Chinese example. According to the head of the Duma’s Committee on Finance and Markets, Anatoly Aksakov, the American intelligence services could monitor the digital currency markets, and this would clearly be a more than valid reason for the Russians to ban any transactions in the country altogether. 

It is difficult to see how parliament and the government will move on this matter in the coming weeks. It is likely, however, that the central bank may accelerate the digital rouble project, which could be a first possible attempt to break free from the dollar’s overwhelming power on international markets.