Russia uses cryptocurrencies for oil trade with China and India – Reuters

Some Russian oil companies use Bitcoin, Ethereum, and stablecoins such as Tether to facilitate the conversion of Chinese yuan and Indian rupees into Russian rubles, sources said.

This represents a small but growing portion of Russia’s total oil trade volume, which, according to the International Energy Agency, amounted to $192 billion last year.

Russia has created multiple systems, and USDT (Tether) is just one of them, according to a source from a research company tracking cryptocurrency use for sanction evasion.

US President Donald Trump seeks to improve relations with Russia as he pushes for an end to the war against Ukraine, but it remains unclear whether sanctions will be lifted. Reuters reported that the White House is considering options to ease sanctions, but on March 7, Trump posted a message stating that he is seriously considering imposing additional sanctions on Russia.

Cryptocurrency will likely continue to be used in the Russian oil trade, one of four sources said, even if sanctions are lifted and the dollar can be used again. It is a convenient tool that helps facilitate faster transactions, they added.

As an example of how this trade works, a Chinese buyer of Russian oil pays an intermediary trading company in yuan to an offshore account, according to two sources familiar with the transactions.

The intermediary converts this money into cryptocurrency and transfers it to another account, from where it is sent to a third account in Russia and converted into rubles, they said.

According to one source familiar with a trader’s operations, the volume of cryptocurrency transactions carried out by one Russian oil trader in China amounts to tens of millions of dollars per month.

Analysts note that the majority of Russian oil transactions are still conducted in traditional currencies, though other workarounds exist, including the use of the UAE dirham.

One Russian cryptocurrency exchange, Garantex, was sanctioned by the US in 2022 and by the European Union last month. The platform suspended operations last week after Tether blocked digital wallets on its platform.

Cryptocurrencies for sanction evasion

Cryptocurrencies are one of several ways to bypass payment issues, according to a source advising the Kremlin. An analysis by the UK’s Royal United Services Institute for Defense Studies and the Center for Information Resilience also supports this view.

Cryptocurrencies have already helped US-sanctioned countries like Iran and Venezuela sustain their economies while avoiding the use of the dollar - the preferred currency for global oil market transactions.

Russia’s actions followed Venezuela’s increased use of digital currency for crude oil and fuel exports after Washington reimposed sanctions.

Although Russia has publicly encouraged cryptocurrency use and last summer passed a law allowing digital currency payments in international trade, its use in oil trade had not been previously reported.

Last year, Russia’s central bank stated that payment delays due to sanctions had become a significant problem for the country’s economy.