Russian President, Vladimir Putin, has said that cryptocurrencies were too unstable to be used to settle oil contracts.
The Russian leader stated this in an interview with CNBC that was published on the Kremlin’s website, on Thursday.
When asked if he could see oil contracts being denominated in cryptocurrencies instead of dollars in the future, Putin said he doesn’t think so, but noted that they still deserved a place as a means of payment.
“It’s too early to talk about that for now because cryptocurrency can of course be a payment unit, but it is very unstable. To transfer funds from one place to another, yes, but I think it’s still premature to trade, especially to trade energy resources.
“It has a place to exist and can be used as a means of payment, of course, but trade in oil, say, or other primary materials and energy sources – still, it seems to me, it is a bit early to talk about this,” Putin said.
Russia has for years been trying to lower its dependence on the U.S. dollar, which is widely used to settle oil contracts, but it has not managed to achieve that on a large-scale, even though some firms have switched to trading commodities in euros.
Russia enacted crytocurrency regulation in early 2021, and has made it illegal to pay for goods and services in cryptocurrencies in the country, though it is legal to invest in them.
The Central Bank of Russia said Russians investing in cryptocurrencies has the potential to become a significant problem. It points to the lack of transparency on crypto markets as well as huge risks involved due to the volatility.
According to the Centra Bank, the country could move to ban crypto purchases, but Russians would still be able to buy the currencies via foreign intermediaries.