Grandparents Also Say "Pay National Pension in Bitcoin"... Russians Flock to Cryptocurrency [Current Affairs Show]

Crypto Transactions Become Routine After Ukraine War
Russian Government Also Encourages Adoption... Established as an Alternative Payment Method

■ Broadcast: The Asia Business Daily 'So Jongseop's Current Affairs Show'

■ Host: Political Specialist So Jongseop

■ Producer: Lee Kyungdo

■ Guest: Reporter Lee Hyunwoo

In Russia, demands to receive national pension payments in Bitcoin and other cryptocurrencies are spreading rapidly. While pensions are typically paid in the country’s legal tender, the prolonged war in Ukraine and Western sanctions against Russia have caused the value of the ruble and the payment environment to change drastically. As a result, even the elderly are now calling for pension payments in cryptocurrencies instead of rubles.

Russian citizens want pensions paid in coins... Cryptocurrency trading active even among the elderly

Reuters Yonhap News

According to the Russian Social Fund, there were about 37 million pension-related inquiries from citizens last year, with a significant portion asking whether pensions could be received in cryptocurrencies. Currently, Russian pensions are paid in the national currency, the ruble, but dissatisfaction is growing as the ruble’s decline in value and payment restrictions have greatly reduced real purchasing power.

Before the war, the exchange rate in Russia was about 70 rubles per US dollar, but after the conflict began, it surged to 120 rubles per dollar. Although the government has now forcibly fixed the rate in the 80-ruble range, some point out that this rate is largely meaningless, as dollar transactions have become virtually impossible. In practice, it has become difficult to freely use either rubles or dollars in the market.

Due to Western sanctions, the Russian government can no longer use the dollar for foreign trade, so a significant portion of transactions, including oil exports, are now conducted in yuan or cryptocurrencies. This shift has also impacted Russia’s domestic transaction structure. As the war has made it harder to procure daily necessities, import dependence has increased, and payments using cryptocurrencies have risen, rapidly expanding the use of coins in domestic transactions.

As of last year, the scale of cryptocurrency circulation in Russia was estimated at $376.3 billion (about 551 trillion won), making it the largest in Europe. This figure far surpasses that of the United Kingdom, which was previously considered the largest holder in Europe. Observers note that the significance lies in cryptocurrencies becoming not just an investment tool, but an everyday means of payment.

The demographic using cryptocurrencies has also changed dramatically. While cryptocurrencies have generally been seen as a market for people in their 20s and 30s familiar with smartphones and digital environments, in Russia, even the retired elderly are actively participating in coin trading. As using cryptocurrencies has become unavoidable for purchasing daily necessities, the smartphone penetration rate among the elderly has risen sharply, and there are now more cases where the elderly trade cryptocurrencies more than stocks.

Russian government encourages coin investment... Emerging as an alternative payment method

TASS Yonhap News Agency

The Russian government’s stance has also shifted significantly. At the beginning of the war, it completely banned cryptocurrency transactions out of concern for capital flight and the outflow of national wealth. However, starting last year, it made a 180-degree policy reversal. As dollar transactions became blocked and even oil exports became difficult, the government lifted cryptocurrency regulations and began allowing their use as a means of payment for exports.

In particular, the oil market had been an area where dollar payments were essentially mandatory under the 'petrodollar' system. With dollar transactions no longer possible, Russia became dependent on black market deals, and cryptocurrencies emerged as a major payment method in this process. Cryptocurrency payments are also increasing across the broader economy, including for importing raw materials needed for weapons production, establishing themselves as an alternative to official currency.

There are concerns that cryptocurrency, as a blockchain-based payment method, makes transaction tracking and taxation difficult. Nonetheless, analysts say that the Russian government has effectively come to tolerate and even encourage the use of coins, as it has no other choice but to prevent the collapse of the ruble’s value and the paralysis of the overall economy.

Some argue that this trend is not unique to Russia. In the United States, for example, investments in cryptocurrencies by retirement pension funds are permitted, and globally, there is a growing acceptance of cryptocurrencies as institutional assets. The volatility of Bitcoin has decreased compared to the past, and it is now considered stable enough to be called 'digital gold,' further supporting this shift.

However, there is still caution about directly paying pensions in cryptocurrencies. In a bear market, there is a high risk of principal loss, and if issues arise with pension funds or export/import payments, it could affect the country’s credit rating. In South Korea as well, the National Pension Service is investing in cryptocurrencies indirectly, but observers predict it will take more time before they are used as a payment method.

The demand for pension payments in cryptocurrencies seen in Russia is interpreted not merely as an investment craze, but as a result of rapid changes in the payment and distribution structure due to war and sanctions, with cryptocurrencies becoming deeply embedded in everyday life. The ongoing debate about pensions is also seen as an extension of this transformation.