Last Updated: 20 June 2022
The head of Russia’s central bank says the use of bitcoin and other cryptocurrencies is being considered for international payments.
Elvira Nabiullina, head of the Central Bank of the Russian Federation, recently attended the St. Petersburg Economic Forum (SPIEF). Here she discussed how Russia can use bitcoin and other cryptocurrencies for international trade, Kommersant reported.
Bitcoin for international transactions
“Our position is that cryptocurrency should not be used as a unit of account in Russia itself… As for use in international transactions, if it does not penetrate the Russian financial system, it is possible,” Nabiullina told the event.
By unit of account, she means that you may not price products in shops in, say, sats, but in the Russian rouble.
Alternative for SWIFT
Several Russian banks are disconnected from SWIFT, the dominant international payment system. Russia could build an alternative to this, or use another payment network. One such payment network is Bitcoin, and it has the added advantage (or disadvantage, depending on who you ask) of being completely censorship-proof.
Bitcoin means freedom
Censorship-proof means that anyone can make unalterable and reliable transactions without the consent of a third party. Politicians, companies, or banks can do whatever they want, but they can’t stop you from sending bitcoin to your friend in Russia or your cousin in Iran. Nor can they, for example, stop ordinary people in Venezuela, where inflation is at an all-time high, from having bitcoin and using it for purchases.
This censorship resistance means freedom, but unfortunately (but also somewhat logically) politicians and banks see this freedom as a threat to their purposes. For example, in the Netherlands, when you buy bitcoin you must show that you are sending it to a wallet of your own. This is, of course, a load of nonsense, as you can then send these BTC on to anyone in the world.
Regardless of these restrictions, bitcoin is borderless and can still facilitate transactions that circumvent centralised restrictions. The idea that no country, company or third party has the power to determine who can conduct transactions or store wealth through bitcoin is one of the key value propositions of cryptocurrency.
Not even customs can stop bitcoin
Just about any cryptocurrency can be used for international payments but bitcoin is the world’s greatest example of a censorship-proof network. No one can shut down bitcoin because it runs on thousands of computers around the world. No one can stop you from sending Bitcoin to another address, assuming you have an internet connection and know how to create your own wallet. And not even customs can stop you from taking €1 billion of bitcoin to another country. All you need is a piece of paper with 12 or 24 words.
Putin contradicts central bank
Back to SPIEF, before Nabiullina made these comments, the central bank’s deputy chairman, Ksenia Yudaeva also said that Russia has no objection to bitcoin payments “in international transactions and international financial infrastructure.”
What a difference from earlier this year. Before the war, the central bank proposed a ban on mining and trading cryptocurrencies. Following this announcement, Russian President Vladimir Putin openly challenged the central bank’s view that the country had a “competitive advantage” in mining and asked them to reconsider.
In response to Putin’s request for reconsideration, a bill was introduced by the Russian government to regulate bitcoin and the broader cryptocurrency ecosystem. In the same month, the Ministry of Finance released its amended version of the bill to properly regulate the ecosystem.