What is Putin up to with Bitcoin?

In response to Western sanctions, Russia seems increasingly open to crypto trading. Vladimir Putin has now explicitly mentioned Bitcoin as a possible strategy.

Russia has long used crypto transactions to circumvent Western sanctions. Now Vladimir Putin has confirmed that the country plans to rely more heavily on cryptocurrencies such as Bitcoin in the future.

During the investment forum "Russia Calling" spoke the Russian president advocated investing state reserves in infrastructure, logistics, science and education, rather than keeping them in foreign currency. "A legitimate question: why build up reserves when they can be lost so easily?" said Putin.

As an alternative, he mentioned Bitcoin: "Who can ban it? Nobody." According to Putin, the development of new payment technologies is inevitable.

Russian change of direction

Since the invasion of Ukraine, the West has imposed heavy sanctions on Russia, including freezing Russian assets. In February 2022, the G7 countries confiscated more than €300 billion in Russian central bank reserves.

Russia, which has traditionally been tough on cryptocurrencies, now appears to be relaxing its policy.

• In August, Putin signed a law legalizing crypto-mining in Russia.

• He announced that Russia is working on a legal framework for digital currency trading.

• Since November, the use of crypto for foreign trade has been regulated.

• Recently, the Russian government approved a bill to tax crypto profits.

According to blockchain analysis company Chainalysis, Russia is increasingly using crypto to circumvent sanctions.