Rus­sia looks to Bit­coin to soften US sanc­tions

The Daily Telegraph - Business - - Business - By Hasan Chowd­hury

RUS­SIA is pre­par­ing an in­vest­ment in Bit­coin to re­place the US dol­lar as a re­serve cur­rency in a bid to tackle US sanc­tions, ac­cord­ing to a Rus­sian econ­o­mist with close ties to the Krem­lin.

Vladislav Ginko, an econ­o­mist at the Rus­sian Pres­i­den­tial Academy of Na­tional Econ­omy and Pub­lic Ad­min­is­tra­tion, a state-funded in­sti­tu­tion, said the gov­ern­ment is tak­ing steps to min­imise the im­pact of US sanc­tions that have hit the Rus­sian rou­ble by re­plac­ing some of its US dol­lar re­serves with the most pop­u­lar cryp­tocur­rency.

US sanc­tions fol­low the poi­son­ing of for­mer Rus­sian mil­i­tary of­fi­cer Sergei Skri­pal. Mr Ginko be­lieves Rus­sia’s de­ci­sion is a move to “pro­tect its na­tional in­ter­ests”. He claims in­vest­ment could be as much as $10bn (£7.8bn).

Cryp­tocur­ren­cies have seen a surge of in­ter­est in Rus­sia, with Pres­i­dent Vladimir Putin ex­press­ing in­ter­est in the dig­i­tal as­sets in re­cent months. Mr Ginko be­lieves Bit­coin and the wider cryp­tocur­rency in­dus­try now ac­count for 8pc of Rus­sia’s GDP, and in­vest­ment to bol­ster the coun­try’s re­serves with Bit­coin could start as soon as Fe­bru­ary.

“[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,” Mr Ginko said. “These sanc­tions and the will to adopt mod­ern fi­nan­cial tech­nolo­gies lead Rus­sia to in­vest­ing its re­serves into Bit­coin.”

The Cen­tral Bank of Rus­sia is yet to pub­lish of­fi­cial plans, but said in a state­ment that it “pub­lishes in­for­ma­tion on the for­eign as­sets man­age­ment with a six-month lag”. The coun­try has shown signs of de-dol­lar­i­sa­tion by boost­ing its hold­ings of the euro, Chi­nese ren­minbi and Ja­pa­nese yen.

Mati Greenspan, se­nior mar­ket an­a­lyst at eToro, said that there is “def­i­nitely an in­ter­est from the [Rus­sian] gov­ern­ment to do this”.

Bit­coin saw a dras­tic sell-off in 2018 that saw its mar­ket cap­i­tal­i­sa­tion slip from $230.9bn in Jan­uary to $66.6bn by the end of De­cem­ber.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.