Can Bitcoin Revive the Economy in Crimea?

Crimea is facing a crisis due to economic sanctions since it was annexed by Russia. The market is currently in desperate need of a solution which Bitcoin can readily provide until it stabilizes.

In the present day, how often do we use hard cash for transactions? Not much, since it has been gradually replaced by plastic currency. Carrying around and making transactions with cards has become safer and more convenient than hard cash. But it has all changed in the Crimean Peninsula, a landmass on the northern coast of the Black Sea.

Crimea, formerly Ukrainian territory is now part of Russia since its annexation early last year. Russia’s annexation of Crimea followed by Ukrainian civil war has made Russia along with its Crimean territory a “sanction magnet”. It has been targeted with sanctions after sanctions by the former Western bloc nations including the US and EU. As a result, assets of important people and institutions in the region have been frozen. Leading card payment processors like MasterCard and Visa have stopped operating in Crimea, making hard cash the only mode of transaction.

It is a big blow for a place like Crimea, whose major portion of the economy depends significantly on tourism. Crimea is witnessing a fall in tourism as the number of visiting tourists has been reduced by over 60 percent due to sanctions and disturbance in the region. It is not feasible for tourists to carry hard cash with them, wherever they go. It has not just affected the tourists, but also the residents. The ATMs do not work, forcing people to visit their banks to withdraw or deposit money.

Now, this situation presents a very attractive opportunity to adopt bitcoin as an alternative means of transaction, especially after the speculation of Russia banning bitcoin has been temporarily put to rest. Adopting Bitcoin at this stage will prove to be a game changer with a potential of correcting the offset caused by the sanctions. Bitcoin transactions will enable people to use their mobile wallets instead of cards to pay for goods and services. Similarly, tourists do not have to carry hard cash, just enough Bitcoin in their digital wallet. Bitcoin will also reduce financial institutions in Crimea the burden of manually processing payments to the public.

As you read, the Russian Central Bank is working on including Crimea into National System of Payment Cards (NSPC), which will take a couple of months. Visa and MasterCard are expected to resume their operations through NSPC, once implemented.