Russian President Vladimir Putin asserted in response to a question about cryptocurrencies that digital assets are not ready for energy industry regulations. The proposal would replace the US dollar as the world’s reserve currency and use digital assets to secure trade deals for raw materials used in power generation, such as coal, gas and oil.
With the US dollar in a weakened position following aftershocks from the pandemic, Putin may feel the time has come to go on the offensive. Russian government officials said Russia hopes to gain political capital by increasing its gas exports to Europe. The US dollar was chosen as the world’s reserve currency in 1944.
The Federation strikes back
Russia has been living under US sanctions since 2014, almost five years. It’s no surprise that Putin is looking for ways to bring Russia and Europe closer together in the face of an increasingly isolated United States. For example, global governments appear to be taking different approaches to regulating digital assets, which the Russian government will no doubt be watching closely.
Europe depends on Russia for 50% of its natural gas and will face shortages of servers without it.
Putin has denied accusations of “arming” the gas crisis in Europe and it appears that Russia is willing to help Europe in return for pretending to be reasonable. While the Russian media has hailed Putin as the hero of Europe’s gas crisis, it is likely that Russia will try to use the situation to argue for a lifting of US sanctions, or, failing that, to replace the dollar by another currency for the colonies.
Special mining tariffs announced
Despite the ban on crypto trading in Russia, the Ministry of Finance has said it has no plans to ban trading on foreign exchanges.
This isn’t Russia’s first attempt to soften its stance on cryptocurrencies, with some leniency in May for settling contracts using crypto.
In addition, Russian cryptocurrency miners receive special electricity tariffs for their operations. Mining is notoriously expensive for energy consumption, so it may be a way to better regulate these operations, especially since since the departure of Chinese miners after the country’s ban, Russia is now in the limelight. third place in the world for hashrates.
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Will the US dollar be replaced for crypto settlements? Putin seems to be hoping so – let us know what you think in the comments below.
About the Author
Jack Pearson is a cryptocurrency publisher specializing in DeFi and digital assets. Jack has a keen interest in the future of finance and how blockchain technology will take shape in the decades to come. Holder of a Research Master (MRes) in History, he aims to contextualize current innovations with where they could one day lead. Jack remains optimistic that digital assets can succeed where traditional financial models have failed. Jack is an investor in Ethereum.