A top politician in Russia’s State Duma has indicated an interest in selling the country’s energy in Bitcoin (BTC), following big swings away from the dollar and euro.
On 24 March 2022, Pavel Zavalny, the chairman of the State Duma’s Committee on Energy, held a press conference with Russia Today, the Russian government’s news channel. He attempted to explain how Russia will transition away from selling natural gas in dollars and euros, despite the fact that global energy markets are predominantly denominated in those currencies.
Upon the naming of “Friendly” states like China, Turkey, and Serbia, and Russia’s willingness to trade with them in exchange for their own currencies, Zavalny added that it was a common practice.
Zavalny went on to say that if the trade is going to be in Bitcoin then they’re willing to trade with the same cryptocurrency, which sounded more like an afterthought than a policy statement.
Furthermore, Zavalny’s speech follows Putin’s statement yesterday that “unfriendly countries” — meaning, the United States and the European Union — will have to pay for natural gas in rubles rather than dollars or euros. The move is in response to the strengthening sanctions on Russia and its financial system, which have effectively separated the country’s banks and wealthiest residents from the rest of the world. The US Treasury, by contrast, sanctioned 328 of Zavalny’s State Duma colleagues by name today, though Zavalny has yet to appear on the specifically designated national list.
Settlements in Bitcoin will no longer be sanctions violation
Despite US pressure to move away from Russian natural gas, Europe remains largely reliant on it for energy, leaving those markets open to trade. While requiring Europe to find rubles to pay for Russian gas is likely to hinder imports, it is part of Russia’s shrinking arsenal of countermeasures.
While the United States has blocked Russian oil, gas, and coal imports, it has not imposed secondary penalties on non-US buyers of those commodities. Settlement in Bitcoin would not be a sanction breach any more than settlement in any other currency, depending solely on who was on the opposite end of the exchange.
Nonetheless, the US government has expressed concern that crypto could be utilised in future sanctions evasion. However, Bitcoin, which has a market capitalization of just over $800 billion, would face substantial liquidity concerns if it were to accept even a small portion of Russia’s energy exports.