Russia is considering whether or not to use cryptocurrencies to circumvent Western sanctions.
Russia and international payments in cryptocurrencies
The Russian government is discussing the possibility of using cryptocurrencies for international payments.
Reuters reports this, citing the Russian news agency Interfax.
Interfax revealed that the head of the Russian Finance Ministry’s financial policy department, Ivan Chebeskov, explicitly stated that the idea of using digital currencies for international transactions is currently being discussed in the government.
In Russia, there is currently a kind of tug-of-war over the regulation of cryptocurrencies and digital currencies, with the Ministry of Finance more open on the one hand, and the Central Bank much more sceptical on the other.
Chebeskov revealed that this discussion has been ongoing for months now, and although the government expects that crypto will sooner or later be made legal in the country as a means of payment, no consensus has yet been reached with the Central Bank in this regard.
The key point at the moment is that the use of cryptocurrencies for international payments could help the country counter the impact of Western sanctions, as confirmed by Chebeskov himself.
Even before the war in Ukraine broke out, it seemed that Bitcoin could be used by the Russians to circumvent blockades and restrictions, but it seems that this has only happened to a partial extent.
However, if instead of citizens or private companies it was the government directly using them, then the situation could change quite a bit.
The relationship the Russian government might have with crypto
The fact is that decentralized cryptocurrencies, such as Bitcoin or Ethereum, are in no way censurable or restrictable. Therefore, if the Russian government owned a non-custodial wallet, no one could prevent it from sending cryptocurrencies to another address anywhere in the world as payment for some kind of service or product.
This also applies to stablecoins pegged to fiat currencies, particularly the dollar, because if tokens are used on decentralized blockchains with non-custodial wallets, it is impossible to prevent their use.
However, if the wallet addresses of Russian authorities were known, they could be blacklisted from centralized exchanges, thus making it extremely difficult, if not impossible, to trade cryptocurrencies for fiat currencies.
It is also worth mentioning that Russians appear to be among the world’s largest users of cryptocurrencies, taking the percentage of citizens of the world’s largest countries that use cryptocurrencies as a reference.
According to a recent estimate, crypto mining in Russia absorbs as much as 2% of the entire national electricity consumption.
So, while Russian institutions and authorities are still sceptical about this, many citizens and private companies seem not to be.
In such a scenario, it seems unlikely that the authorities will eventually choose to stay away, and not take advantage of the benefits they could gain by opting for a possibly regulated use of these new technologies.