Russia - The Strategic Reserve Of Bitcoins Is Taking Shape

After the United States and Brazil, it is now Russia’s turn to consider integrating bitcoin into its foreign exchange reserves!

Bitcoin, Да!

The deputy of the Duma from the “New People” party, Anton Tkachev, officially requested the Minister of Finance of the Russian Federation, Anton Siluanov, to create a strategic reserve of bitcoins.

“I ask you, dear Anton Germanovich, to assess the feasibility of creating a strategic reserve of bitcoins that would complement the foreign exchange reserves in traditional currencies. If this initiative receives a favorable opinion, I ask you to submit it to the government of the Russian Federation”, can be read in the letter.

The young deputy specifies that traditional foreign exchange reserves – notably the yuan, dollar, and euro – are threatened by sanctions and inflation. For Anton Tkachev, the time has come to introduce new payment systems, as well as inviolable reserves in the face of geopolitical upheavals.

“Cryptocurrencies are practically becoming the only way to trade internationally for sanctioned countries with limited access to traditional international payment systems. […] Moreover, in recent years, bitcoin has shown the highest return among all investment assets”, he wrote.

JUST IN: 🇷🇺 Russian State Duma Deputy Anton Tkachev proposes creation of a #Bitcoin strategic reserve in Russia.

— Watcher.Guru (@WatcherGuru) December 9, 2024

Vladimir and Bitcoin

Unless Europe and the United States lift the freeze on Russian foreign exchange reserves (300 billion euros), alternative monetary systems like bitcoin will gain more prominence. This is essentially what the Russian president stated at the Valdai Club Moscow Forum last month:

“We are not abandoning the dollar. It is the United States that refuse us to use it. It is foolish on their part since it is the pillar of American power. Its use as a means of payment is not declining that much, but its role as a reserve currency is gradually diminishing. […] We are thinking about the payment tools of the future.”

Facing this distrust, President Trump raised his tone by threatening the BRICS with punitive tariffs if they abandon the US dollar:

“The idea that BRICS countries would cut themselves off from the dollar while we stand idly by is over. We demand that these countries commit not to create a new currency, nor to support another currency to replace the dollar, otherwise, they will be subject to a 100% tariff.”

The Russian president responded last week at the Moscow Economic Forum by mentioning the term Bitcoin for the first time. Here is the payment tool of the future that was being discussed.

“Who can ban bitcoin? No one. […] It is a new technology. Whatever happens to the dollar, these tools will develop, whether we like it or not, because everyone wants to reduce costs and gain reliability”, he declared.

Mr. Putin also took the opportunity to remind how the United States illegitimately benefits from printing international currency.

Exorbitant Privilege

The Russian president denounced the undue advantages the United States gains from printing international reserve currency, citing figures:

“The use of the dollar as an international currency brings a lot of money to the United States. Money that is unearned. According to our experts, we are talking about approximately 10 trillion dollars gathered in just the last ten years, simply because the dollar is used as the world reserve currency. Ten trillion, that’s a lot; it means they consume more than they produce. And that is very important.”

🇷🇺VLADIMIR PUTIN:

"First of all, I agree that using the dollar as a world currency brings the United States unearned money in large quantities.

According to our experts, somewhere over the last ten years they have made US$10 trillion out of thin air, just for the fact that the… pic.twitter.com/vzWCtMzBhf

— Sony Thang (@nxt888) December 5, 2024

This money is obtained in multiple ways. For example, by collecting interest on loans from international institutions like the IMF or the World Bank, which are mostly made in dollars.

Moreover, according to the Bank for International Settlements, foreign borrowing in dollars amounts to 12.8 trillion. This is as many dollars as American banks collect interest on.

Furthermore, 58% of global foreign exchange reserves are placed in Treasury bonds (which is 23% of US public debt). In total, the equivalent of 8 trillion dollars of US debt is held by foreign entities. This allows the United States to borrow cheaply.

Finally, these dollars that return home offset their gargantuan trade deficit. The greenback remains strong despite a chronically trade-deficit balance. No other country can import more than it exports without seeing its currency collapse.

In short, the United States is parasitizing the global economy, and this fat rent explains much of the current geopolitical tensions.

Bitcoin in Reserve

Despite American ire expressed through a proxy war in Ukraine, the trend towards dedollarization is irreversible. The world is searching for a new international reserve currency to trade on equal terms.

For over a decade, China has been relentlessly reducing its dollar reserves. Many countries are also diversifying their reserves, notably into gold, and sooner or later, Gulf countries will trade the petrodollar for the petroyuan.

America has no choice but to reduce its standard of living, which will concretely translate into a decrease in imports. Either through a decrease in the dollar’s exchange rate or in advance through tariffs desired by Donald Trump.

The next American president seems ready to make concessions rather than trigger a world war. This is signaled by his intention to produce more on American soil and his green light for the creation of a strategic bitcoin reserve.

Allowing Washington to acquire bitcoins before everyone else could facilitate the emergence of a fair international monetary system. Becoming the international reserve currency par excellence is bitcoin’s natural destiny. For two main reasons:

-It is infinitely rarer than gold. Bitcoin is a technological breakthrough that creates for the first time an absolute store of value.

-Moreover, it is stateless and unseizable. No one can “freeze” foreign exchange reserves held in bitcoins.

Bitcoin offers an exit for the United States to save face and avoid a third world war. It is a Bretton Woods 2.0.

That said, the Russians do not seem to intend to let go of their priority, and it will be interesting to see if the Duma acts before the US Congress.

In any case, let us remember that Russian bitcoin miners already control 17% of the hashrate and that the industry is growing even faster than in the United States.

Don’t miss our article: “Soon a strategic reserve of Russian bitcoins?”.