According to a high-ranking politician, Russia is considering accepting Bitcoin as payment for its oil and gas exports.
According to Pavel Zavalny, “friendly” countries may be permitted to pay in cryptocurrency or local currency.
Earlier this week, Russian President Vladimir Putin stated that he would like “unfriendly” countries to purchase Russian gas in roubles.
The action is thought to be intended to strengthen the Russian ruble, which has lost more than 20% of its value this year.
Sanctions implemented by the United Kingdom, the United States, and the European Union in response to the invasion of Ukraine have put pressure on Russia’s rouble and risen its cost of living.
However, Russia remains the world’s largest natural gas exporter and the world’s second largest supplier of oil.
Russian President Vladimir Putin wants “aggressive countries” to pay for gas in roubles.
Zavalny, the chairman of Russia’s State Duma’s energy committee, stated on Thursday that the country is looking into other ways to get money for energy exports.
He mentioned China and Turkey as “friendly” countries that were “not involved in the sanctions pressure.”
“We have been proposing to China for a long time to switch to settlements in national currencies for roubles and yuan,” said Zavalny. “With Turkey, it will be lira and roubles.”
Zavalny added: “You can also trade bitcoins.”
Despite the risks, some believe Russia will profit from accepting the popular cryptocurrency.
“Russia is very quickly feeling the impact of unprecedented sanctions,” said David Broadstock, a senior research fellow at the Energy Studies Institute in Singapore. “There is a need to shore up the economy and in many ways, Bitcoin is seen as a high growth asset.”
However, he observed that the value of Bitcoin has fluctuated by up to 30% this year. In comparison, the dollar has fluctuated within 5% of the euro.
“Clearly accepting Bitcoin, compared with other traditional currencies, introduces considerably more risk in the trade of natural gas,” Broadstock said.
“Moreover, one of the major ‘friendly’ trade partners for Russia is China, and cryptocurrency is banned for use in China,” he added. “This clearly limits potential for payment using Bitcoin.”
Concerns have been raised that Russian oligarchs may be exploiting virtual currency to dodge sanctions.
This has prompted the Ukrainian government, as well as US and European politicians, to request that all Russian users be barred from crypto-currency sites.
However, many businesses have ruled this out.
“Some ordinary Russians are using crypto as a lifeline now that their currency has collapsed,” said Brian Armstrong, chief executive of cryptocurrency firm Coinbase.
“Many of them likely oppose what their country is doing, and a ban would hurt them, too,” he said.
Putin’s comments on making “unfriendly” countries pay in roubles sent the currency to a three-week high on Wednesday.
Many existing gas contracts, though, are in euros, and it is uncertain whether Russia can change them. The EU imports 40 per cent of its gas from Russia.
(Adapted from BBC.com)