After being cut off from the international SWIFT payments network last month, Russia has announced that it will now begin accepting Bitcoin and gold in exchange for its exports, beginning with natural gas.
“When it comes to our ‘friendly’ countries, like China or Turkey, which don’t pressure us, then we have been offering them for a while to switch payments to national currencies, like rubles and yuan,” Zavalny said during the press conference. “With Turkey, it can be lira and rubles. So there can be a variety of currencies, and that’s a standard practice. If they want Bitcoin, we will trade in Bitcoin.”
Zalvany’s comments during the press conference echo Russian President Vladimir Putin’s statement on Wednesday that ‘unfriendly’ nations should be mandated to purchase Russian gas in either “hard money,” naming Bitcoin and gold, or a currency that is convenient to the Russian government, such as the ruble.
It remains unclear whether Russia will be able to renegotiate its existing contracts that originally mandated payment for oil in euros.
The statements have raised some concerns that the current size and liquidity of the Bitcoin market could be insufficient to deal with massive international trade transactions.
The announcement follows a Russian proposal to ban private sector cryptocurrency trading and mining, citing potential risks for unqualified investors. At the same time, the country’s bank is entering the pilot phase of its digital ruble rollout.
The Central Bank of the Russian Federation has also announced plans to resume purchasing gold from the domestic market, which it had previously put on hold back in 2020. According to the World Gold Council, Russia held approximately 2,300 tonnes of gold at the end of January 2022.
“There has been no indication given around the scale of future purchases, but we will continue to monitor developments,” said Krishan Gopaul, market intelligence manager at the World Gold Council.
Gold prices have dramatically risen since Russia began its invasion of Ukraine; on March 8, the price briefly breached $2,000 per ounce, the highest price the commodity has seen since September 2020.
This rise puts the current market price only slightly below the commodity’s all-time high of $2,075.14.