In light of new Russian sanctions, Russia is warming up to digital cryptocurrencies. Recent events have meant that Russia is changing its view of cryptocurrencies. With the signing of Russian sanctions into law on August 2nd, Russians are looking for ways to avoid the effects of the sanctions with the help of cryptocurrencies.
As little as a year ago, Russia was prepared to jail those who used foreign cryptocurrencies. They were pushing their digital Ruble, but it wasn’t finding wide adoption. Efforts to increase digital Ruble adoption have failed. In the view of many, it was just another government fiat currency and went against the principles of digital cryptocurrency.
Things have changed rather rapidly over the last year as Russian authorities have seen the value of a currency that is not subject to the whims of international financial circles. In June, Russian President Vladimir Putin quietly announced a turnaround in how Russia would treat digital currencies. Furthermore, it was announced that the Russian Duma would be passing new legislation surrounding digital currencies.
The first major bank in Russia announced on August 3rd that they would start using Ethereum to track their contract. Ethereum is the cryptocurrency of choice for Russia. Its unique contract ledger system means that contracts can be issued and stored in the blockchain. These smart contracts can operate as autonomous agents.
Ethereum, Bitcoin, and other digital currencies provide an easy way to handle international money transfers without leaving a paper trail. Once a transaction enters the system, it’s difficult to tell who owns the coin or not. It’s difficult, if not impossible, to put limits on the how the currency is used and who uses it.
It’s theorized in an August 5th Daily Beast article that the Russians have rapidly turned to cryptocurrencies as a way to get around the sanctions. There is some evidence of this as we can see that as sanctions have increased, the value of Ethereum has increased from about $7 at the time of the original sanctions under Obama to $195 just a week before the sanctions law was signed. It’s now sitting at $254 just 2 days after the sanctions law was signed into law.
The Russian sanctions are having an effect on Ethereum exchange as Russians increasing turn to the cryptocurrency as a way around the sanctions imposed by the US government. The sanctions are here to stay and the only question is how many more sanctions will be applied against Russia for the election hacking accusations.