Vladimir Putin Promotes Bitcoin As Dollar Reserve Alternative
Putin's comments on Bitcoin and the necessity to reduce Russia's foreign currency reserves have generated headlines.
Russian President Highlights Bitcoin
Putin told an investment conference in Moscow that the current geopolitical climate, especially after the West froze $300 billion in Russian reserves due to the Ukraine conflict, raises legitimate questions about holding state reserves in foreign currencies.
Putin said that these assets are easily seized for political reasons, making local investments in infrastructure, logistics, research, and education more appealing than foreign assets.
“A legitimate question: why accumulate reserves if they can be lost so easily?” he said, highlighting the volatility and hazards of keeping reserves in currencies that might be “easily manipulated by foreign powers.”
The Russian leader accused the US government of exploiting the dollar as a “political tool,” weakening its standing as the global reserve currency. It's apparently forced numerous governments to pursue Bitcoin and other digital assets.
Putin said, “No one can prohibit the use of Bitcoin or other digital assets,” pointing to the need for cheaper, more reliable payment technology.
Putin's statements came amid G7 negotiations about using frozen Russian cash to help Ukraine, highlighting geopolitical pressures affecting Russia's financial plans.
Putin has authorized measures to control cryptocurrency mining and transactions by taxing them.
Digital currencies are property under Russia's Tax Code, hence mining and sales are VAT-free. However, mining operations must report to local authorities and face fines for noncompliance.
This legislation shows Russia's desire to regulate but embrace digital currencies, which might boost financial independence after a 2022 ban on Bitcoin mining and other crypto businesses.
Putin approved rules authorizing the Central Bank to investigate cross-border cryptocurrency transactions earlier this year.
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