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Russia embraces crypto amid international sanctions and rising cyber threats

Russia poised to capture 18% of global Bitcoin hashrate amid crypto miner exodus

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TL;DR

  • As economic sanctions and cyberattacks amplify, Russia is turning towards cryptocurrency as a potential safeguard.
  • Financial entities like Rosbank are innovating with crypto-based solutions, including a cross-border payment system.
  • Amid an escalating geopolitical climate and intensified cyberattacks from Ukrainian hackers, the trend of increased crypto usage in Russia is likely to continue.

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.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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Mutuma Maxwell

Maxwell especially enjoys penning pieces about blockchain and cryptocurrency. He started his venture into blogging in 2020, later focusing on the world of cryptocurrencies. His life's work is to introduce the concept of decentralization to people worldwide.

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