Crypto use in Russia has increased by 4% in 2023, outstripping the growth rate in the US four-fold, according to a recently published survey.
Statista reports that Russia’s cryptocurrency use rose to 14% in 2023, while in the US it only increased by 1%. This takes the US user rate to 16%.
Crypto’s rise in Russia has increased as sanctions placed on the country have started to bite and the inflow of US dollars and Euros into Russia has been severely restricted. This has prompted the Bank of Russia (Russia’s central bank) to restrict the withdrawal of US currency to prop up the rouble.
Restricting the outflow of US dollars is a common tactic employed by countries hit with a monetary crisis to preserve the value of their local currency against the dollar.
Efforts to ban crypto have been largely fruitless in Russia but it hasn’t been for lack of trying. Last July, the State Duma signed a law outlawing the use of crypto for payments of goods and services, while the Bank of Russia pushed for an outright ban. Recently, the Russian government also scrapped plans to create a national crypto exchange and is set to issue guidelines for the private sector.
Russia is currently served by numerous crypto exchanges, including Binance, Kraken, Bybit, Okcoin, and Bittrex.
Attacks from Ukraine have turned Russians toward crypto
The use of crypto in Russia looks likely to continue increasing, particularly as Russian banks and other financial entities are increasingly being hit by cyber attacks from Ukraine’s IT Army. These attacks frequently cause bank outages and financial disruption to established financial channels.
As of this year, at least five Russian banks and three insurance companies have been successfully hacked and disrupted by Ukraine. In addition, the Russian online tax system and the country’s social fund have been attacked, causing temporary disruptions of services.
A hack on major telecom firm ER-Telekom also caused bank outages, with the provider serving major banks including Alfa-Bank and Sberbank. PayTrans, a major payments system for the Moscow Metro system was also hit and its online code and data were damaged. Payments systems Moneta and YooMoney (previously Yandex.Money) were hacked as well.
In the wake of such major disruption, Russian banks and businesses look to be turning to crypto and blockchain to avoid further disruptions. Indeed, Rosbank has recently announced that it’s planning to launch a cross-border payments system using crypto tokens while the Russian Institute of the Commissioner for the Protection of Rights of Entrepreneurs has recommended that the government further open up crypto for use in payments and international transactions.
Attacks on Russia’s financial system could well increase as Ukranian hackers attempt to escalate their operations in tandem with their armed forces. The country has been planning a counter-offensive against Russia in its occupied land since last year, and a recent official Ukrainian propaganda video encouraging information silence may indicate that it could begin very soon.