Russia may be open to accepting bitcoin as payment for oil and gas from “friendly” nations, as it scrambles to bolster its freefalling ruble.
A top Russian government executive has said the nation may consider accepting bitcoin as payment for its oil and gas from “friendly” countries, in a bid to circumvent severe sanctions which have seen the value of the ruble decimated.
As Western powers keep Russia in a sanction stranglehold over President Vladimir Putin’s invasion of Ukraine, the Kremlin is seeking other ways to get around the economic disaster of its freefalling currency.
Head of Russia’s State Duma committee on energy Pavel Zavalny said in a news conference late last week that the country might accept various currencies – such as Turkish lira or Chinese yuan – depending on the buyer’s preference.
“When it comes to our ‘friendly’ countries, like China or Turkey, which don’t pressure us, then we have been offering them for a while to switch payments to national currencies, like rubles and yuan,” he said.
He also said that if these countries wanted to switch their payment choice to bitcoin, then Russia would be open to it.
As news filtered out of the possibility of Russia accepting the cryptocurrency, its value rose to around $A60,000, CoinGape reported.
According to data from Coingecko, the value of the digital coin increased by over 4 per cent in the 24 hours after Mr Zavalny’s comments.
The move could also have an effect on the ruble, with estimates that it could help raise the value of the troubled currency by as much as 20 per cent, the BBC reported.
Sting in the tail for ‘unfriendly’ nations
The Russian President, however, has told “unfriendly” nations they can now only pay for gas and oil in rubles. Currently sales are largely made in euros or US dollars.
“Russia will continue, of course, to supply natural gas in accordance with volumes and prices … fixed in previously concluded contracts,” Mr Putin said during a televised meeting with government ministers.
“The changes will only affect the currency of payment, which will be changed to Russian rubles,” he said.
The announcement sent shockwaves through Europe, which is heavily dependant on Russian natural gas, and was enough to see the ruble’s value go back up to a three-week high.
It is still very low though, currently sitting at just under $US0.01.
The currency plunged to below one American cent almost as soon as Russian troops entered Ukraine.
Germany’s Vice Chancellor and Economy Minister Robert Habeck said Mr Putin’s demand for payment in rubles was “first and foremost a breach of contracts, and we will talk with our European partners on how we respond to this”.
Meanwhile a senior Polish government source said the move “would constitute a breach of payment rules included in the current contracts” and said Poland had no intention of signing new contracts with Gazprom after the existing deal expires, reported CNN.
A spokesperson for Eneco, a gas supplier in Netherlands, said it had a long-term contract for purchases to be made in euros.
“I can’t imagine we will agree to change the terms of that,” they said.
Mr Putin gave the government and central bank one week to come up with a solution on moving operations into the Russian currency.