The price of Bitcoin rose on Friday after a Russian politician said that the country’s governments could start using the cryptocurrency to pay their gas bills. Pavel Zavalny, the head of a parliamentary committee on energy, said that Turkey and China could use Bitcoin to settle cross-border transactions.
He stated that Russia has been working with China for a long time to allow the country to use Bitcoin to settle cross-border transactions. Diversifying Russia’s financial base by using Bitcoin and other cryptocurrencies could help it avoid getting stuck with the U.S. and European Union’s sanctions.
In response to the U.S. and the European Union’s sanctions, Russia’s foreign reserves have been frozen in several countries, including Switzerland and the United Kingdom. This prevents the country from using its foreign reserves to boost its currency. The announcement was met with a lot of enthusiasm by Bitcoin bulls, who had already predicted that the digital currency would become an economic asset.
According to Seth Wunder, the chief investment officer of the Acorns app, Bitcoin can be used for real-world transactions. One of the reasons why Bitcoin has been regarded as a risky investment is its lack of intrinsic value. However, as the conflict in Ukraine has created new uses for Bitcoin, the perception of its potential has started to change.
According to Wunder, the increasing use of Bitcoin for practical applications is expected to have a significant impact on the cryptocurrency’s demand over the long term. The price of Bitcoin reached a high of $44,600 on Friday, which is a significant increase from the previous day’s level. It’s the highest since early March when the conflict in Ukraine was expected to encourage the widespread use of cryptocurrencies.
Crypto Sanctions are Being Applied
Since cryptocurrencies are not exempted from the sanctions imposed by the EU, Zavalny noted that Russia’s offer to allow the country’s governments to use Bitcoin and other digital assets could only be made to countries that are not participating in the retaliatory measures against Russia.
An official from the European Commission noted that the use of Bitcoin and other digital assets in cross-border transactions would be subject to the same anti-money laundering regulations as other financial transactions. The sanctions imposed by the U.S. and the EU have severely affected Russia’s ability to fund its military campaign against Ukraine. The conflict in Ukraine started after President Volodymyr Zelenskyy tried to align his country with the West.
A day after the conflict started, Russia asked its allies to settle their gas bills in rubles in an attempt to prop up the sagging ruble. The stronger the ruble, the lower its domestic inflation rate is expected to be. It could also help reduce the country’s dependence on foreign sources of income. A survey conducted by Russia’s consumer watchdog showed that Russians expect inflation to reach a median level of 18.3% over the next 12 months.
Dil Bole Oberoi
