Russia has raised the possibility of using bitcoin to pay for the country’s commodities, a move that analysts say may be harder in practice to carry out.
In comments made at a news conference on Thursday, Pavel Zavalny, the head of Russia’s State Duma committee on energy, said the government would be open to more flexible options on paying for its oil and gas from “‘friendly” nations.
“We’ve been offering China to switch to transacting in national currencies, such as the Ruble and the Renminbi, for a while now,” he said, according to a translated report of those comments. “With Turkey, that would be the Lira and Ruble. Currency sets can be different; it’s a common practice. You can also trade bitcoins.”
Russia has been grappling with a wave of sanctions imposed by the U.S. and E.U. and allies in response to its invasion of Ukraine more than a month ago, with more measures announced this week. On Friday, Russian Foreign Minister Sergey Lavrov reportedly said the West’s goal was “to destroy, break, annihilate, strangle the Russian economy and Russia on the whole.”
Earlier this week, Putin announced that Russia would demand “unfriendly countries” use rubles to keep its oil and gas flowing. The country was struggling to find buyers for its oil earlier in March, though China and India have reportedly been picking up cheaper crude oil from Russia.
Europe has been struggling to cut its dependence on Russian energy products. The U.S. and the EU on Friday announced a new partnership aimed at that goal.
Some attributed a push higher for bitcoin BTCUSD on Thursday to Zavalny’s comment. The cryptocurrency was up 4.7% to $44,870 on Friday, the crypto has gained 7% this week.
“The news sent Bitcoin’s price above the 100-DMA [daily moving average] resistance, yet there are a couple of questions that hang in the air,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, told clients in a note.
“One: China hates bitcoin; will it change its mind to buy cheap Russian oil? If China buys the Russian oil in exchange of bitcoin, will Chinese be able to trade Bitcoin as well? Then, how long the West, which recently didn’t want to impose restrictions on Bitcoin, will tolerate Russia going around sanctions via bitcoin. Could the West ban the Russian bitcoin like they did with the Russian gold? And if yes, is it even possible to ban ‘Russian’ bitcoin?” said Ozkardeskaya.
On Thursday, a senior U.S. administration official said the Group of Seven nations and European Union will continue to “blunt” the Central Bank of Russia’s “ability to deploy international reserves by making clear that any transaction involving gold related to the Central Bank of Russia is prohibited.”
Russian officials earlier resisted the use of cryptocurrencies. The central bank proposed banning the use and mining of cryptocurrencies, citing financial stability and the sovereignty of monetary policy for one, but Russia is now facing an extremely difficult economic landscape as those sanctions begin to bite.
“That does sound like it will generate some demand for bitcoin, however, I’m not so sure who’d actually use bitcoin to purchase oil from Russia,” said Yuya Hasegawa, crypto market analyst at Tokyo-based Bitbank in emailed comments.
“The major importer, the EU, has stopped the purchase already and there are risks for holding bitcoin (volatility wise). So, I think the number of purchasers who’d take the risk and use btc to buy Russian oil is limited at the moment,” said Hasegawa.