Vladimir Putin sees value in cryptocurrencies, but it is too early to consider crypto-backed oil trades

Russia’s President Vladimir Putin shared his views regarding cryptocurrencies in a recent CNBC-moderated panel at the Russian Energy Week event. Cryptocurrencies were mentioned in relation to the economic sanctions that the U.S. continues to impose on Russia. In this respect, Russia is currently looking at moving away from dollar-backed oil contracts, and cryptocurrencies have the potential to replace the dollar in this type of trade. Russia is also planning to drop U.S. dollar assets from its sovereign wealth fund. Putin acknowledges that cryptocurrencies have value, yet “it is too early to talk about the oil trade in cryptocurrency.” For now, the Russian President does not believe cryptocurrencies can back oil contracts.

Putin pointed out that, even though cryptocurrencies “have the right to exist and can be used as a means of payment,” these are “not secured by anything as of yet.” Additionally, the Russian President expressed his concern that the cryptocurrencies’ massive consumption of energy could be seen as one of the major barriers to their use, plus they are too volatile. Still, Russia seems to be among the countries that show more tollerance towards cryptocurrencies, as Deputy Finance Minister Alexei Moiseev stated earlier this week that there are no plans for a blanket ban similar to how China cracked down on cryptocurrency transactions and mining.

This increased tolerance is also reflected in the latest Bitcoin mining statistics that show Russia as the world's third hashrate provider with 11.2% of the total , up 5.3 % since September 2019, mostly after the Chinese mining ban imposed this May. The U.S. is already the largest hashrate contributor with 35.4%, while Kazakhstan, a former member of the Soviet Union, is now second with 18.1%.

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