Russia is a large producer of oil and is currently subjected to US-imposed trade sanctions. Photo: iStock

Russia is to join the growing number of nations exploring cryptocurrencies to avoid western sanctions. Moscow, which reportedly has legislation ready to step up Russia’s digital asset industry regulation, also has imminent plans to launch its own oil-backed digital currency.

According to a report on the Russian web portal Rambler last week, the Russian parliament, the State Duma, plans to review and adopt laws on cryptocurrency regulations as early as next month. State Committee on Economic Policy member Oleg Nikolaev told the publication that the new legislation was in its final drafting stages.

Rambler also quotes Russian Energy Minister, Igor Yusufov as saying that the development of a road map scheduling the process for the introduction of an oil-backed cryptocurrency was also in its final stages. Yusufov added that settlement via digital currency in the energy market would allow Russia “to avoid the costs associated with the use of currencies that are not backed up”. The statement was in reference to unpredictable exchange rate fluctuations, commissions for currency exchanges and the effects of trade sanctions.

Yusufov said that there was an instability regarding payments in dollars at the moment which an energy-sector-focused cryptocurrency would help to alleviate. “After the launch of the cryptocurrency platform, oil-producing countries will be able to maneuver with respect to financial and trade restrictions” added Yusufov, “which have become too many in recent years.”

The notion of distancing itself from the US dollar as a reserve currency is a strong one and digital currencies are viewed as a potential work around. Earlier this year Asia Times reported on the potential stockpiling of Bitcoin by Russia to avert any further danger from dollar dealings.

Russia has good reason to open the doors to crypto trading as it is currently subjected to US-imposed trade sanctions. Neighboring China has faced a similar situation with Washington but to date has preferred to prevent its population from getting involved in crypto by banning it.

Russia is not a member of OPEC but is a large oil producer. Conversely, Iran and Venezuela, both OPEC members, have been hit heavily by US economic sanctions which hampers their ability to export oil. Both countries have also ventured into crypto to circumnavigate this problem. Venezuela launched the Petro, a state cryptocurrency backed by oil and mineral reserves last year. Iran is also in the process of launching its own crypto Riel to combat ongoing US efforts to cripple its economy.

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