Putin Says Crypto Is Not Worth Paying For Oil Trading, What's The Reason?

The President of Russia, Vladimir Putin, said that cryptocurrencies could not be legal tender. (photo: instagram)

JAKARTA - Russian President Vladimir Putin has said that cryptocurrencies are too volatile to be used to settle oil contracts. However, crypto is still considered worthy of a place as a means of payment.

The Russian leader made the remarks in an interview with CNBC published on the Kremlin website on Thursday, October 14 in Russia. When he was asked if he could see oil contracts denominated in cryptocurrencies instead of dollars in the future, Putin said he was very doubtful.

Russia has for years been trying to lower its dependence on the US dollar, which is widely used to settle oil contracts. However they have not managed to achieve it on a large scale although some companies have switched to trading commodities in euros.

“It's too early to talk about that for now because cryptocurrencies can certainly be a unit of payment, but they are very volatile. To transfer funds from one place to another, yes, but I think it is still too early to trade, especially to trade in energy resources," Putin said.

Russia made cryptocurrency regulations this year and has made it illegal to pay for goods and services in cryptocurrencies in the country, even though it is legal to invest in them.

"It has a place to exist and can be used as a means of payment, of course, but trade in oil, say, or other key materials and energy sources, still, in my opinion, it is too early to talk about this," Putin said.

The central bank said Russians investing in cryptocurrencies could potentially be a significant problem. This shows the lack of transparency in the crypto market as well as the huge risk involved due to the volatility there.

Although Russia could move to ban crypto purchases, Russians can still buy currency through foreign intermediaries, the bank source said.