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Russia may be looking to use cryptocurrencies for oil trade to avoid payments in U.S. dollars and limit the impact of the U.S. sanctions, Russia’s government-backed outlet RT reports.
The bitcoin mania—on which the jury is still out whether it will be the biggest bubble in history or a success—could be a “fresh catalyst” for countries that want to ditch the U.S. dollar in oil trade, according to Stephen Brennock, an oil analyst at PVM Oil Associates.
“The advent of cryptocurrencies, therefore, represents a fresh catalyst for commodity-producing countries wishing to abandon the dollar as a means of payment for oil,” Brennock said in a research note on Friday, quoted by CNBC.
Last week, Venezuela’s President Nicolas Maduro announced that the country wanted to launch a cryptocurrency—the petro—backed by oil, diamonds, and gold reserves. In his regular hours-long Sunday broadcast, Maduro said that the petro would help the country to “advance in issues of monetary sovereignty, to make financial transactions and overcome the financial blockade.”
Venezuela’s opposition lawmakers say the announcement of a cryptocurrency creation is a farce, and the plan may not be implemented at all.
If Maduro’s plan for the petro cryptocurrency sees the light of day and attracts interest, “it may eventually prevail as a means of conducting financial transactions — including oil sales,” according to analyst Brennock.
According to Russia’s RT, cryptocurrencies “are anonymous and decentralized, which limits the effect of US economic sanctions on trade deals for countries like Russia, Iran and Venezuela.”
China, however, could be the “sticking point” for future cryptocurrency transactions, according to Brennock.
China is aiming to have its own ‘petroyuan’ dethrone the U.S. dollar in oil transactions. At the same time, Beijing shut down Bitcoin exchanges earlier this year as part of its plan to ban digital currencies to reduce financial risks.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.