Russia Seeks Refuge In Crypto | QPOL Issue #24
How Russia is using sound money to regain national sovereignty.
It’s no question that there is a bifurcation of global powers on the geopolitical chess board. With the West’s stern reluctance to negotiate with the Global South, the BRICS nations have taken measures to migrate to the East by embracing technologies in order to establish national sovereignty and monetary independence from the Davos Crowd. Most notably, Russia has taken to crypto in numerous ways. There have recently been multiple stories and announcements that Russia will implement crypto currency as part of their national policy. This comes as no surprise given their efforts to break away from the international order and control under the West by joining BRICS. It should be mentioned however, that this isn’t necessarily “news”. Russia has been making gradual moves towards a new payment system for some time now.
At the same time, both BRICS and the US (most notably the Federal Reserve and its shareholders, the commercial banks) are trying to remove themselves from EU/Davos influence. The greatest way to do so is to be monetarily independent and build payment system’s beyond Davos’s control and have domestically-focused monetary policy. By looking at these strategies taken by BRICS and the Fed, it can easily be concluded there’s a tacit coordination between the two to take out Davos and assert its national sovereignty that’s divorced from the West’s "Rules Based Order.”
International Payment System
Russia’s plan to implement crypto for international payments has been in the works for some time now. In September, the bank of Russia agreed to legalise crypto for cross-border payments since the ruble is the only form of legal tender in the nation. As of late November, the Kremlin is making things more official. Translated from the Kremlin itself,
"The President of the Russian Federation called to create a new international payment system based on blockchain and digital currencies. Putin called for the creation of a new system of international settlements, independent of banks and third parties, based on blockchain and digital currencies. The project to create such a system was presented at the First Eurasian Economic Forum in Bishkek in our joint report by D. Mityaev."
This makes sense as Russia has been kicked out of the SWIFT system and obviously has still been subject to sanctions and other policies such as price caps (which ironically have benefited Russia amidst the war in Ukraine). Back in May, Cryptosaurus reported that NATO slapped Russia with sanctions, marking the rapid escalation of the Russo-Ukrainian war after its invasion of Ukraine earlier this year. In addition to the travel ban and asset freeze, the West rolled out a list of financial sanctions, including cutting major Russian banks from SWIFT and phasing out imports from Russia. All this was aimed at paralyzing the Kremlin to prevent Putin’s invasion.
Launching A Crypto Exchange
A Duma official expressed that “It makes no sense to deny the existence of cryptocurrencies" when asked about launching a national crypto exchange. Due to the sanctions, the retail demand for gold in Russia increased significantly because they were no longer able to sell foreign securities in their brokerage accounts. Nor could they transfer money outside of Russia. A possible valve for trading hard assets may be opened in response to the limits that have been placed on Russian citizens.
It’s clear that Bitcoin and crypto in general is the cryptonite of both the ECB and EU. By opening up a national crypto exchange, Russia has a way of opening their markets to the world in an un-censored manner to attract global capital, especially as capital flees the EU amidst the economic suicide it continues to enact on its peple.
Beyond Crypto: The Russian Gold Standard
In a roundabout way, Russia forced the world on a quasi gold standard by requiring other countries to pay them for their resources either in rubles or gold. Russia set a fixed price for gold in April, May, and June at approximately 5,000 rubles per gram. As Russia’s central bank began buying that gold at a discount, it increased the value of both the ruble and gold (because the ruble can be converted into gold and vice versa). What Russia accomplished was stabilizing their currency by backing its value with hard money (in this case gold).
Russia bought lots of gold locally in its own domestic market for a very strategic reason. During the Russia Ukraine war, gold went up in price, but decreased in price in Russia since they upped their production. As mentioned above, Russia was able to secure the value of it’s currency via accepting payment of their resources in either rubles or gold.
This strategy not only secured the ruble, but it also increased Russia’s credibility in the future. With a large amount of gold reserves, any country that does business with Russia can be assured that if Russia can’t pay them in currency, they can always just pay them gold instead as a backup. This was a hedge against the Western Powers who attempted to wreck the value of the ruble as they have in the past. Linking their currency to hard money was the way to fight back.
The Fed has also been a proponent of a gold standard, and more on this topic can be explored in a separate post. Unfortunately, it seems Russia is front-running the US and taking the charge on leveraging outside-moeny tactics to free themselves from the clutches of Davos. This should send alarms to Congress and the Fed should they wish to declare monetary and national sovereignty. There’s a lot the US can learn from and could probably front run Russia and the rest of BRICS on in order to stay competitive in global markets. Capital flight would flood the US if they re-monetized gold and the EU’s detrimental policies run itself into the ground. Money moves to where it is treated best. From how I see it, it could flow either to the US or Russia when all is said and done.
Your move, America…
~ Phil Gibson