How Is Bitcoin Driving The Russian National and Foreign Economic Policy?

Russia has never shied away from radical and bold decisions when it comes to its political ongoings, and today is not an exception.

The Russian economist, Vladislav Ginko, has made a statement that Russia is planning to invest $10 billion in Bitcoin, considering cryptocurrency regulations and legislation has been set high on the agenda for 2019, by the State Duma.

This comes as a reaction to US sanctions, that have been levied on Russia since December 2018. These are a fresh round of restrictions which comes at a time when the US is working on a blacklist of individuals, reportedly involved in a Kremlin-backed campaign to manipulate the 2016 US presidential election.

These sanctions target 15 members of a Russian military intelligence service and four entities who have been accused in the election interference fiasco, the hacking of the World Anti-Doping Agency and other “malign activities” around the world.

The Russian government is hitting back by announcing that it will convert some of its USD reserves into Bitcoin. Word is, they might follow through with this from February itself. Ginko, an economist with known ties to the Kremlin said:

[The] Russian government is about to make a step to start diversifying financial reserves into Bitcoin since Russia [is] forced by US sanctions to dump US Treasury bonds and [take] back US dollars.

Ginko has labelled Russia’s “will to adopt to modern financial technologies” as the primary reason for this mammoth investment in Bitcoin.

Mati Greenspan, Senior Market Analyst at eToro, said the following in reaction to the news.

The proposal that I understand is on the desk of the finance minister at the moment is to create some sort of intermediary cryptocurrency.

This investment that will apparently lead to de-dollarization is a legit power move by the Russians who are trying to circumvent the sanctions like Iran did, via cryptocurrency.  This is more or less the direction the Russian government is going. In fact, Iran sought out Russia’s help with the development of their national cryptocurrency.

Further developments are taking place in the country with regard to cryptocurrencies. Alexander Zhukov, the First Deputy Chairman of the State Duma, has said that cryptocurrency regulations are a primary focus of legislative work for 2019. Here is an excerpt from a recent article on the official State Duma website:

Among the priorities of parliamentary work in the spring session are issues of the development of the digital economy, bills aimed at improving the anti-corruption legislation, as well as amendments that will strengthen the fight against financial scammers.