Crypto adoption in Russia has experienced significant growth, outpacing the United States by a factor of four, according to a recent survey.
With Russia’s cryptocurrency usage rising by 4% in 2023, Statista reports that it now stands at 14%, while the US only saw a 1% increase, reaching a 16% adoption rate.
Russia’s increasing embrace of cryptocurrencies can be attributed to the impact of international sanctions and restricted inflows of US dollars and Euros.
In response to the sanctions, the Bank of Russia has imposed limitations on the withdrawal of US currency to stabilize the value of the Russian ruble.
This strategy of restricting the outflow of US dollars is commonly employed by countries facing monetary crises to safeguard their local currencies.
Despite efforts to ban cryptocurrencies in Russia, such attempts have been largely ineffective. In July of the previous year, the State Duma passed a law prohibiting the use of crypto for payments of goods and services, while the Bank of Russia advocated for an outright ban.
However, recent developments have seen the Russian government abandon plans to establish a national crypto exchange and instead focus on issuing guidelines for the private sector. Notably, several established crypto exchanges, including Binance, Kraken, Bybit, Okcoin, and Bittrex, serve the Russian market.
The prevalence of cyber attacks on Russian banks and financial institutions by Ukraine’s IT Army has played a significant role in driving crypto adoption within Russia.
These attacks often lead to banking system outages and financial disruptions in traditional channels. Over the past year, multiple Russian banks, insurance companies, and critical infrastructure systems, including the online tax system and social fund, have fallen victim to successful cyber attacks from Ukraine.
Facing ongoing cyber threats, Russian banks and businesses are increasingly turning to crypto and blockchain technology as a means to mitigate potential disruptions.
In response to the attacks, Rosbank has announced plans to launch a cross-border payments system using crypto tokens.
The Russian Institute of the Commissioner for the Protection of Rights of Entrepreneurs has also recommended further opening up the use of cryptocurrencies in payments and international transactions.
As Ukrainian hackers continue to target Russia’s financial system, the frequency and severity of attacks are expected to rise in tandem with military operations.
Ukraine has been planning a counter-offensive against Russia in its occupied territories, and recent official propaganda videos advocating information silence indicate that these actions could begin imminently.