By Ian Silvera
The crypto world is currently distracted by the small and cuddly meme project Shiba, which briefly flipped Dogecoin in the token rankings, with a market cap of around $40 billion. But there have arguably been more substantial developments within the landscape of late, namely Vladmir Putin’s acceptance of Bitcoin.
The Russian president stated that cryptocurrency “has the right to exist and can be used as a means of payment” in an interview with CNBC. His remarks, although nothing new, do cement his pro-crypto position and follow years of cryptocurrency adoption in Russia.
The Russian Association of Cryptoeconomics, Artificial Intelligence and Blockchain (RACI), also recently announced a new project to bring global miners to the country and Putin’s own attempts to woo Ethereum co-founder Vitalik Buterin, are well-known. The pair spoke back in 2017 and Russian-born Buterin later helped form ‘Ethereum Russia’ alongside state-owned bank VEB.
A 2020 survey also found that Ukraine and Russia were leading the way in cryptocurrency adoption. The collapse of the Soviet Union is one pointer as to why digital assets have become so popular in this part of Eastern Europe, while the world dominance of the US dollar is another. With the White House continuing to put sanctions on Moscow, Putin has decided to remove dollar assets from its $186bn National Wealth Fund.
This is low-level economic warfare and perhaps Kremlin sees the adoption of crypto as countering the US’ economic influence. However, there is a prevailing view among crypto evangelists, most notably MicroStrategy’s Michael Saylor, that the rise of Bitcoin will effectively make the US dollar even more prominent in the global economy.
Why? Because crypto gains – and losses – are often converted into US dollar stablecoins, some of which are synthetic, while others are backed by the actual currency. China meanwhile, has taken a very different approach to crypto, most recently declaring via the People Bank of China, that all transactions were to be deemed illegal. The original ban came in 2019.
The country however, is reportedly developing a Central Bank Digital Currency (CBDC), putting it third in a global development index of CBDCs behind Cambodia and the Bahamas. Welcome to the political economy, Bitcoin.