Russia Plans Bitcoin Adoption To Minimize the Impact of U.S. Sanctions On Its Economy

In order to avoid the impact of U.S. economic sanctions, a number of countries like the Venezuela and Iran have resorted to adopting cryptocurrencies, more specifically Bitcoin. The latest to join them is Russia.

According to reports, Russia is planning to replace the U.S. Dollar with Bitcoin as its reserve currency to overcome and limit the impact of U.S. sanctions. This news was confirmed by Vladislav Ginko, an economist at the state-funded institutions - Russian Presidential Academy of National Economy and Public Administration.

The economist said that the decision to reduce the dollar reserve was basically to protect its national interest against the interruption of “US nominated payments flows for Russian oil and gas”.  Mr. Ginko also said that the Russian state can invest up to $10 billion in Bitcoins, as reported by The Telegraph.

Mr. Ginko also noted that the wider cryptocurrency industry now accounts for nearly 8% of Russia’s GDP. These measures to boost up the country’s reserve with Bitcoin could start by the next month of February.

Mr. Ginko said: “[The] Russian government is about to make a step to start diversifying financial reserves into Bitcoin since Russia [is] forced by US sanctions to dump US Treasury bonds and [take] back US dollars”.

He further added: “These sanctions and the will to adopt modern financial technologies lead Russia to the way of investing its reserves into Bitcoin.”

Over the last few months, the Russian Central Bank has been taking steps to de-dollarize it economy by growing its reserves in the Euro, Japanese Yen, and Chinese Renminbi.

In 2018, the Bitcoin valuation dried from over $200 billion to less than $70 billion by the year end. As per Russia’s proposed plans to invest in Bitcoin, it could buy a nearly sixth of BTC reserves which could drive the price of the cryptocurrency higher.

On the other hand, Russian president Vladimir Putin has been recently showing a good amount of interest in crypto assets. In 2017, President Putin also met Ethereum co-founder Vitalik Buterin to discuss different possibilities in this sector.

Mr. Greenspan says: “We know that Vladimir Putin is a big advocate of blockchain technology. Obviously he doesn’t like the sanctions that have been placed on him and he’s already said that these types of sanctions are going to lead to de-dollarisation. This is more or less the direction the Russian government is going.”