Russia is using Bitcoin and other digital assets to counter sanctions, which could reshape Russia’s economy. Russian officials called digital assets a lifeline for businesses in a tough financial world.
Anton Siluanov, Russia’s Finance Minister, said on Russia-24 TV:
“Such transactions are already occurring. We believe they should be expanded and developed further. I am confident this will happen next year.”
Western sanctions in response to Russia’s actions in Ukraine have broken Russia’s trade relationships with key partners like China and Turkey.
Traditional payment systems like SWIFT are becoming increasingly unavailable as international banks refuse to deal with Russian entities to avoid regulatory hassle.
To bypass these obstacles Russia is using Bitcoin, which is outside of government control. Bitcoin’s ability to do secure, real-time global transactions makes it an attractive alternative to the US dollar, which President Putin believes is highly politicized.
“The U.S. undermines the dollar’s role as a global reserve currency,” he said, emphasizing “Who can ban Bitcoin? Nobody.”
In 2024 Russia passed laws to legalize bitcoin mining and its use in foreign trade.
The law also changed the taxation framework, exempting digital asset transactions from VAT and treating related income as securities income. This is to increase the country’s financial stability and get into the bitcoin market.
Russia is already a major player in bitcoin mining, second only to China. In 2023 Russia mined 54,000 bitcoin and got 50 billion rubles (around $550 million) in tax revenue.
With the legal framework in place Siluanov is confident to expand this. “We can pay for goods with DFAs. It’s also possible to use Bitcoin mined within Russia under this regime” he said.
While the government is using digital assets globally, it’s restricting mining in energy-challenged regions.
Starting 2025, mining will be banned in regions like Dagestan, Chechnya and parts of Eastern Europe during peak energy seasons. These restrictions will be until 2031 to prevent power imbalances in regions that get subsidized electricity.
Despite these limitations, Russia is committed to using bitcoin for trade. Siluanov called it practical and forward thinking, highlighting:
“This is the future of international trade.”
Russia’s move into bitcoin has broader geopolitical implications.
For decades the US dollar has been the global trade currency and America has had a lot of power over the global economic system. But Russia’s move into bitcoin signals that countries are looking to move away from dollar based trade.
Related: BRICS Nations Eye Bitcoin to Break Free from the U.S. Dollar
Putin has been very vocal about his support for digital currencies saying they can operate outside of central authorities. “No one in the world can regulate Bitcoin,” he said.
He also mentioned the possibility of creating a national bitcoin reserve to further strengthen the Russian financial system.
Despite the government’s enthusiasm for bitcoin in trade, officials are warning the public to be cautious with personal digital asset investments.
Siluanov, at an event in November, said citizens should not treat digital assets as a get rich quick scheme. “I don’t recommend cryptocurrency as a means of investment. There are safer ways to achieve good returns,” he said.
