Cryptocurrency Adoption on the Rise in Russia Despite Lingering Trust Issues

Table of Contents

• Increase in Crypto Transactions and Awareness
• Proposed Solution to Crypto Mining Electricity Demand
• Russia Turns to Crypto amid Sanctions
• Outlook

According to a recent claim by Evgeny Kogan, a Professor of Economic Sciences at the National Research University Higher School of Economics (HSE), cryptocurrency adoption is growing among Russian citizens.

Increase in Crypto Transactions and Awareness

Kogan noted an uptick in the number of Russians making transactions with Bitcoin and other digital tokens. However, in a statement to Coinspot, he mentioned that most people still distrusted cryptocurrencies and associated them with financial pyramid schemes. The Central Bank of Russia reported that nearly all financial pyramid scams detected in the previous year involved crypto themes.

According to the study conducted by HSE, less than 1% of Russians currently use digital tokens, though awareness of blockchain technology and its applications is growing, with about 3% now being familiar with the industry.

Proposed Solution to Crypto Mining Electricity Demand

HSE researchers have shown increased interest in cryptocurrency adoption and regulation. In one proposal, the university suggested forcibly disconnecting crypto miners from the electrical grid for 500 hours per year as a solution to managing increased electricity load from mining in Siberia.

Russia Turns to Crypto amid Sanctions

Western sanctions imposed on Russia’s financial system in response to its invasion of Ukraine have led some in the country to adopt cryptocurrency as an alternative. As stated in a Bloomberg tweet, Russia’s far eastern regions have emerged as a significant force in global crypto mining due to low energy costs and cold temperatures that help cool mining rigs.

Meanwhile, some Russian firms are utilizing cryptocurrency for international settlements as domestic banks face restrictions from networks like SWIFT. However, while individual adoption and mining volume is increasing, the government has yet to pass comprehensive crypto regulation.

Outlook

Though awareness and real-world use cases are growing in Russia, cryptocurrency will need to overcome persistent distrust issues to achieve mainstream adoption. Lawmakers have promised to accelerate crypto laws but have not voted on any major draft bills. Whether comprehensive regulation facilitates or hinders further development remains to be seen.

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