In the latest turn of events, Russia is reportedly thinking of replacing the US Dollar with famous cryptocurrency, Bitcoin, as its reserve currency to minimize adversity of the US sanctions imposed on it. Vladislav Ginko, a Russian economist, has stated that Russia is planning to invest over $10 billion in Bitcoins, and converting USD reserves to the cryptocurrency could start as early as February this year.
The US Congress imposed sanctions on the country on the basis of a report by intelligence agencies which stated that Russia interfered in the 2016 presidential elections. These sanctions have motivated the Russian government to adopt Bitcoin as their reserve currency to minimize the setbacks it is bound to face. Ginko has also stated that this move by his country could soon inspire other countries to follow suit and that the time to replace USD has come. It is also expected that Russia is building its intermediary cryptocurrency to trade for bitcoin.
According to experts, cryptocurrency related activities considerably contribute over 8% of Russia’s GDP. Reports suggest that Vladimir Putin, the Russian president, is unhappy about the sanctions, and has been finding a way to de-dollarize his country. He is also said to have keen interests in blockchain technology and has long been a strong advocate for it. Though, Russia has been notoriously famous in the past to have a crackdown on cryptocurrency traders. The local police, reportedly, seized a few crypto ATMs last year, claiming to prevent alleged cross-border transfers.
Last week, a press release revealed by the Russian parliament stated that the digital economy is the topmost priority in the coming session, which may mark the rise of Russia as a global digital economy leader. Vyacheslav Volodin, chairman of the lower chamber, said that more than 20 bills are lined up to be introduced during the spring session. The parliament aims to set a formidable framework in place before making any major move. These developments are a huge step forward in the future of digital currencies, and it is safe to say that cryptocurrencies are here to stay for longer than anyone expected.
In all these political tussles, the biggest benefit is for Bitcoin and its investors. Markets have been plunging and fluctuating a lot for the past several months. Entry of a huge global power in the digital currency space will surely add more stability and boost its credibility. Russia, being a major economy of the world, will surely have a great influence on countries it has trade relations with. It may also inspire countries like India, who have been skeptical about cryptocurrencies, to be optimistic and legalize its use.
All of these recent events have encouraged the Russian masses to invest in Bitcoins. As recent reports suggest, there has been an unusual and substantial increase in demand of OTC Bitcoins by Russians. Over $1 million worth of orders for the purchase of Bitcoins were executed in December 2018 itself. The demand from Moscow has risen to an almost unrealistic 163% in the past few weeks. And the market experts suggest that it is set to increase even further in the coming months.