Bitcoin proved to be an option for Russians to avoid the adverse effects of the war with Ukraine. The trading volume of the RUB/BTC pair has risen to highs not seen since mid-2021, reaching USD 1.5 billion until now.
The Russian authorities recently changed their position on Bitcoin, which they regulated, stigmatized, and even criminalized. They now consider the leading crypto asset a completely legal, regulated, and permitted currency.
Many thought it was a measure Russia took to solve a problem and raise capital. First, they would reduce the sanctions imposed in 2014 due to the annexation of Crimea.
Second, they would encourage Bitcoin miners to establish their businesses in the Siberian area. That zone had a high production of gas and a high amount of excess electrical energy. Besides, the polar climate would make the closing costs insignificant.
The conditions were in place for Russia to embrace BTC and other cryptocurrencies without the control of the Kremlin. In other words, the organic adoption by the population without pressure would begin to develop throughout the former Soviet territory.
The Invasion of Ukraine by the Russian Troops
In late February, sources from the US intelligence announced that Russia was planning to invade Ukraine.
Part of the conflict began with the dissolution of the Soviet Union in 1991 and the annexation of Crimea in 2014. In addition, Ukraine recently requested its inclusion in the European Union (EU) and the North Atlantic Treaty Organization (NATO).
That led many members of the crypto ecosystem to consider the increase in international sanctions another factor to legalize Bitcoin.
The History of the Conflict between Russia and Ukraine Evolves Every Day
Experts inside and outside the cryptocurrency world predicted the consequences of the conflict between the two former Soviet nations. The Russian government decided to legalize BTC against the possible war movement and subsequent sanctions.
One of the sanctions imposed by the West consists of removing some leading Russian banks from SWIFT. The restrictions also include freezing the capital of those financial institutions in the western territory.
That situation could affect the entire Russian status quo and the general population. The latter will have to unwillingly suffer the consequences of the war and the sanctions.
Immediate Economic Consequences of the Sanctions against Russia
Amid globalized interconnection, leading Russian banks had a large part of their capital in subsidiaries worldwide.
Besides removing Russia from SWIFT, the sanctions also blocked the funds of Russians. For that reason, they left banks holding billions of US dollars from the Eurasian country in the red.
Following the announcement of the war and the sanctions, investors from Russia and other countries began to dump their Russian stocks. Besides, panic quickly spread among people, who stood in long lines to withdraw their money from banks.
Bitcoin Proves Its Value in the War between Russia and Ukraine
Russian citizens cannot exchange the ruble for the US dollar or the euro due to its decline and the risk of higher inflation. Besides, they cannot take their capital and investments abroad, which has led them to look for other options.
Bitcoin (BTC) seems to be one of the options with which Russians try to circumvent the effects of international sanctions.
While other countries traded BTC below USD 40,000, people in Russia bought it at USD 41,000 or higher. A similar situation occurred with the pioneering cryptocurrency on the Ukrainian side.
By Alexander Salazar
