During an interview at an event in Moscow with CNBC Vladimir Putin said that cryptocurrencies do have value but that he isn't sure they can replace the U.S. dollar in settling oil trades.
Learn how smart money is playing the crypto game. Subscribe to our premium newsletter - Crypto Investor.
Putin was asked if he thought that Bitcoin or other cryptocurrencies could be used instead of the dollar for trading oil. He responded by saying it’s “too early to talk about the trade of energy resources in crypto. I believe it has value, but I don't believe it can be used to trade oil."
He continued, saying that cryptocurrency isn't yet supported by anything other than as a basic means of payment.
“Cryptocurrency is not supported by anything as of yet. It may exist as a means of payment, but I think it’s too early to say about the oil trade in cryptocurrency.”
While Putin wasn't sure that Bitcoin was ready for use in oil trades, his position on the dollar's dominance and the way the U.S. uses the global reserve was clear.
“I believe the U.S. makes a huge mistake in using the dollar as a sanction instrument. We are forced. We have no other choice but to move to transactions in other currencies," said Putin.
Putin added that the U.S. has a competitive advantage with the dollar as the universal reserve currency.
“In this regard, we can say the United States bites the hand that feeds it. This dollar is a competitive advantage. It is a universal reserve currency, and the United States today uses it to pursue political goals, and they harm their strategic and economic interests as a result.”
Earlier in the year, Russia announced that it would no longer hold the U.S. dollar within its sovereign wealth fund.
Russia is a country that has experienced heavy sanctions from the U.S. Other countries that have similar issues with sanctions, like Iran, Cuba Belarus and others, have started to consider Bitcoin as a way to circumvent these issues. Iran specifically has started to mine Bitcoin in an attempt to generate more wealth while under heavy dollar sanctions from the U.S.
While Iran's GDP is under $200 billion, Russia's is nearly $1.5 trillion. Should Russia follow a similar path in order to circumvent sanctions and the need for dollars, Bitcoin could experience a significant boost in usage.