With sanctions biting hard and cyberattacks causing havoc, Russia is increasingly turning towards cryptocurrency as an economic safety net. The rate of cryptocurrency use in the country rose to 14% in 2023, an increase of 4%, and quadruple the growth rate of the US, according to a recent survey by Statista. In contrast, the US user rate grew by only 1%, reaching 16%.
The harsh impact of international sanctions drives the surge in Russian crypto use. To bolster the rouble, the Bank of Russia has restricted the withdrawal of US dollars, a common tactic deployed by nations facing monetary crises. Meanwhile, the decline in US dollars and Euros flowing into Russia has seen a crypto boom, despite the country’s stringent attempts to ban such activities.
Despite the State Duma outlawing the use of cryptocurrencies for payment transactions in July last year and the Bank of Russia advocating for a total ban, attempts to stifle crypto use have been largely ineffective. Recent plans for a state-backed crypto exchange were also scrapped.
Simultaneously, Russia’s traditional financial sector is grappling with an onslaught of cyberattacks, primarily from the Ukrainian IT Army. Major financial institutions such as Alfa-Bank and Sberbank and payment systems like PayTrans and YooMoney have faced disruptions due to these attacks.
Given this challenging environment, Russian businesses and banks consider crypto a solution. Rosbank, for instance, has announced plans to launch a crypto-based cross-border payments system.
Similarly, the Russian Institute of the Commissioner for the Protection of Rights of Entrepreneurs has suggested the government consider expanding crypto use for payments and international transactions.
With the Ukrainian hackers intensifying their operations amid a heated geopolitical climate, the trend of increased crypto usage in Russia may persist, providing a novel solution in a time of escalating challenges.
