Efforts by the West to punish Russia using an array of sanctions are being undermined as Russian companies increasingly use Bitcoin to evade penalties.
In December, Finance Minister Anton Siluanov acknowledged Russian firms were already using Bitcoin and other cryptocurrencies for international trade following a bill signed into law by President Vladimir Putin. The law, signed last year, regulates the ownership and mining of cryptocurrencies, while maintaining a ban on their domestic use.
Putin’s war with Ukraine resulted in Russian banks being blocked from the SWIFT (Society for Worldwide Interbank Financial Telecommunication) payment platform, effectively halting their ability to finance international trade and process cross-border payments. The sanctions dealt a heavy blow to Russia’s economy and made international banks wary of handling Russian origin payments, fearful that they may be in breach of sanctions.
Putin has since accused the US of weaponizing the dollar. Still, the Kremlin’s decision to include Bitcoin in its economic arsenal against sanctions has sparked a debate that governments are attempting to centrally control cryptocurrency usage. Ironically, this goes against one of the principal tenets surrounding Bitcoin’s creation—decentralization.
Bitcoin’s use among Russian companies is currently restricted to approved entities, but observers say Siluanov’s recent comments suggest that more firms will be permitted to make and receive payments with the benchmark cryptocurrency.
Russia’s change of heart is jarring. As recently as 2022, the Central Bank of Russia (CBR) was pushing for a complete ban on cryptocurrencies. But key officials, including bill author Anton Gorelkin and CBR Governor Elvira Nabiullina, have acknowledged the recent legislative change is aimed at moderating the impact of sanctions while facilitating international payments, according to the blockchain data platform Chainalysis.
And Russia’s pivotal decision has reignited debate over dedollarization efforts by the BRICS trade bloc, of which Russia is a founding member, amid speculation the community will move ahead with a gold-backed stablecoin. President Donald Trump, who signaled an interest in establishing a US Bitcoin reserve, has roundly condemned the initiative. The self-proclaimed “Tariff Man” threatened to slap 100% tariffs on all countries involved should they proceed with the plan.
