Will Russia Buy $10 Billion Worth of Bitcoin?
According to an article published by The Telegraph dated January 14, 2019, the Government of Russia is not willing to allow economic sanctions – that have been imposed by Donald Trump’s government – to affect its economy, and that is why it is considering taking strong measures to combat the so-called American uni-polar world (often mentioned by members of Russia’s Duma). The Russian government is apparently considering an acquisition of up to 10 billion dollars in the form of Bitcoins so as to switch a part of the reserves to cryptocurrencies. Economists have stated that this plan would require a well-planned execution given the amount of money involved in it. It is said that sometime Q1 of 2019, Putin’s administration will be interested in purchasing a minimum amount of 10 billion dollars. Will this actually occur, no one knows – rather, only those not directly involved.
However, Ginko, who is a lecturer at the Russian Presidential Academy of National Economy and Public Administration stated that the US sanctions have forced the Russian economy to diversify and that Russia has no other option at this point of time. He reiterated his prediction by explaining that one of the main reasons behind this move is the increasing tension between US and Russia along with the sanctions which are imposed by the US; stating that it has had an impact on the Russian economy. Ginko further explained that the Russian government could be reconsidering the position on the use of cryptocurrency mainly due to pressure.
Even though Russia is not a major exporter to the United States, the cancellation of energy, space, and defense contracts have had an impact on the economy. The higher oil prices have not done enough to uplift the economy. Because of the US sanctions, Russia has been forced to begin dumping the US dollar. In an article dated July of 2018 written by CNN, it is said that 84% of Us Treasury Bonds were dumped by The Central Bank of Russia. In an article written by Sputnik, dated January 15, 2019, it is stated that The Central Bank of Russia has already dumped a total of $101 billion worth of US Treasury Bonds. According to different sources, this has led to heavy investment in Bitcoins and possibly other crypto, and as of March 16, 2018, The Central Bank of Russia currently sits on $454 billion of reserves. Therefore, it will make sense for the Russian government to diversify. As Warren Buffet says, don’t keep all your eggs in one basket.
President Vladimir Putin mentioned in his recent speeches that it is the dollar which is moving away from Russia and that there is a need to look for alternatives as the USD will continue to have a negative, uni-polar impact on the global economy. He was essentially giving the nudge that the Central Bank needs to find ways to create a financial system which is completely independent from the dollar. Ginko did mention that the Russian government was not against cryptocurrencies and that the President mentioned the adoption of FinTech as a major factor for the survival of the economy. He mentioned that Russia has a great chance to invest in Bitcoin and other countries will soon start doing the same; such as Venezuela. The Russian Government has not yet confirmed the statements but they have been applauded by strong personalities in the crypto verse.
Now, will the Russian government actually go ahead and buy up crypto? No one knows. Will the Russian government purchase crypto in the future or make its own crypto? Maybe. Is the Russian government already holding a certain amount of crypto? The answer is also… no one knows. Therefore, all articles that state that they have facts about something that is done by the Central Bank of Russia, concerning crypto, should be treated with a grain of salt. To an extent, you can say the same thing about this article. In the end, always keep an open mind and think – who will it benefit, who does it not benefit, and what impact will it have 5 – 20 years down the road.