More opportunities for Bitcoin & Co. following Vladimir Putin’s open crypto endorsement

Key Takeaways

• Russian President Vladimir Putin sees potential in cryptocurrencies.
• Putin, however, does not think cryptos will replace the US Dollar for international oil trades.
• Russia will allow crypto trading with exchanges located outside Russian soil.
• Mining firms may also pay more than regular citizens for electricity use in the near future.

YEREVAN (CoinChapter.com) — Cryptocurrencies got another major validation from the political elite club after Russia’s President Vladimir Putin claimed he sees value in digital currencies.

In a detailed interview with CNBC published on the official website of the Russian President, Mr. Putin told Hadley Gamble that he believes cryptocurrencies can be a unit of account. However, Putin does not believe cryptos can replace the US Dollar in international trades yet.

Russian President Vladimir Putin tells me it’s “too early” to consider trading oil contracts in cryptocurrency pic.twitter.com/13t3MQKLJn

— Hadley Gamble (@_HadleyGamble) October 14, 2021

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Cryptocurrencies have a right to exit: Putin

Although the Russian president sees merit in the argument that cryptocurrencies help seamless international transactions, he thinks it is too early to talk about international contracts using cryptos. According to Putin, it is still premature to think of trading in energy resources using cryptocurrencies. 

Putin did not seem very keen to answer CNBC’s question if Russia will consider replacing the greenback with cryptocurrencies owing to US sanctions.

“I believe that it has value, but I don’t believe it can be used in the oil trade,” 

 Putin told Hadley Gamble.

He based his answer partially on the argument that cryptocurrencies are very volatile and have no traditional assets backing them. 

However, the long-time Russian leader made it abundantly clear he does not plan to replicate China’s crackdown on cryptocurrencies. 

Although unsure of its value in global trade, Putin still believes new forms of currencies should develop. 

“Everything evolves, everything has the right to exist. We will see how it will go further, maybe someday it may also be a means of accumulation,” 

he said.

In June, Russia’s deputy prime minister Alexander Novak had claimed his country could consider refusing oil contracts in USD if the United States persists with its sanctions against Russia. 

Putin also confirmed this news during the interview, slamming the US Administration for undermining its position. However, the former KGB officer did not mince his words, making it abundantly clear his US counterparts are leaving him with no choice but to ditch the US Dollar in foreign settlements.

“It seems to me that the United States is making a very big mistake by using the dollar as a sanctions instrument,” 

the president argued. 

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Trade cryptocurrency, but not in Russia

Despite Russia not entirely in favor of cryptocurrencies, the government does not plan to go after people’s digital assets. Kremlin will continue to allow citizens to purchase cryptos online as long as the exchanges are located outside Russia.

Deputy Finance Minister Alexei Moiseev has confirmed that his ministry will not hinder crypto purchases. 

“At present, I can only say that (crypto) payments are not permitted on Russian territory. At the same time, citizens can buy (cryptos) and use wallets outside Russia. That will remain the case, I think. There are currently no plans to change anything,” 

Moiseev told reporters.

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Mine cryptocurrencies in Russia but pay higher electricity rates

The Russian Energy Ministry wants cryptocurrency mining companies to pay more for electricity consumption than regular citizens.

According to the TASS Russian News Agency, Nikolay Shulginov, Russia’s minister of energy, claimed charging higher rates is necessary to ensure an adequate electricity supply.

“To maintain the reliability and quality of power supply, we consider it necessary to exclude the possibility of electricity consumption by miners at tariffs for the population,” 

he said.

up from 8.2% and 6.8% in April. China's share is shown as zero. In 2019, China's share reached a maximum of 75.5%. Industry analysts indicate that this also shows that the US, Kazakhstan, and Russia are the main destinations for Chinese miners to move overseas.

— 8BTCnews (@btcinchina) October 14, 2021

Following the Chinese crackdown, Russia has become one of the popular destinations for mining companies. 

In April, Russia accounted for 8.2% of global Bitcoin (BTC) computing power. Since the crackdown, that number has become 18.1%. 

China’s share has dropped from 75.5% in 2019 to practically zero.

With Russia determined to shun the US Dollar, maybe we will see oil traded in cryptocurrency one day as well.