RUSSIA TO LEGALISE CRYPTOCURRENCIES FOR TRADE

Russian Central Bank and Finance Ministry finally agree to legalize cryptocurrency payments for international trade!

We have been getting mixed signals from Russia regarding Bitcoin, and cryptocurrencies in general.

Much of the conflict stems from the competing interests of the Russian Central Bank (financial system and currency), and the Finance Ministry (economic development), and the Ministry of Trade (international commerce).

Well, it looks like they have finally come to an understanding:

  • Cryptocurrencies for domestic payments: bad.

  • Cryptocurrencies for international trade: good.

It's a start, I guess. The CB and FM have now agreed to a framework to make the cryptocurrencies legal for international trade payments.

But why?

A Brief and Crude Overview

Russia invades Ukraine

-> US+EU apply sanctions on Russia, including ban from SWIFT payments.

-> VISA and Mastercard apply restrictions (no international payments)

-> Commodity prices go up

-> Russia insists on payment for commodities in Rubles from EU.

-> Russian Ruble goes up

-> EUR declines

-> Russia limits/cuts off supply

-> European gas shortage

-> Gas prices go up

-> Inflation soaring

-> Mass protests in EU

It's a mess, and nobody is "winning".

From the moment Russia was cut off from the international financial system, it was inevitable that it would seek alternatives.

Russia had been developing and testing alternatives to the SWIFT payments system for some time. It had also started work on a CBDC - that dreaded form of financial surveillance and totalitarianism that is every central bank economist's wet dream.

In the interim, industry has been pushing to use existing cryptocurrencies. In fact, there have been a number of pro-Bitcoin statements made by various Russian ministries.

Coming back to the issue of gas - Russia will now have an abundance of gas due to the stalemate with the EU, who wish to retain sanctions and also apply price caps, both of which are unacceptable to Russia.

"Former Russian President Dmitry Medvedev said Friday on Telegram that Russia would block all oil and gas deliveries to Europe this winter if the caps are introduced. "

One option would be to flare the gas that would otherwise be sold to Europe. The other...is Bitcoin mining!

There is already an acknowledgement within the government that it has a distinct advantage on this front due to cheap energy. But energy that would otherwise be wasted makes the case even more compelling.

Gazprom, one of the major oil and gas companies, is already mining Bitcoin with excess gas.

Iran is treading a similar path to Russia, and with China announcing it would use the Ruble to pay for Russian gas, we have early signs of "de-dollarisation", and perhaps Bitcoin as a serious alternative for international trade.

There's a long way to go though, and it does seem that we are merely at the beginning of the beginning. Yes, we are still very early :)

Thank you for reading!

...and pls share with your friends and colleagues.

Cheers,

Archie