Russia is relying on crypto in its oil trade with China and India to navigate Western sanctions.
While traditional currencies like the Chinese yuan and Indian rupee remain dominant, digital assets such as Bitcoin (BTC), Ethereum (ETH), and the stablecoin Tether (USDT) are being used to facilitate conversions into Russian roubles, sources told Reuters.
Russia’s $192 billion oil trade has been adapting to financial restrictions since the invasion of Ukraine. Last year, the country passed a law permitting digital currency payments for international trade, but its use in the oil sector had not been previously reported.
Crypto payments help streamline transactions and mitigate delays caused by sanctions.
This news echoes that of Bolivia’s state-owned energy firm, YPFB, which adopted crypto for fuel imports due to a severe U.S. dollar shortage and declining natural gas production. Although not driven by sanctions, the government approved digital asset payments to sustain fuel subsidies amid falling foreign currency reserves.
Tens of millions of dollar’s worth of transactions
The crypto process in the oil trade typically involves a Chinese buyer depositing yuan into an offshore account controlled by a middleman.
The funds are then converted into cryptocurrency and transferred through multiple accounts before reaching Russia, where they are exchanged for roubles. One source said some Russian oil traders process tens of millions of dollars in crypto transactions per month.
Despite the increased use of digital assets, traditional methods still dominate Russia’s oil transactions, with alternatives including payments in UAE dirhams.
However, crypto is expected to remain a useful tool for Russian oil traders, even if U.S. sanctions are eased.
The U.S. and EU have taken steps to curb Russia’s crypto-related financial channels. In 2022, the U.S. sanctioned Russian exchange Garantex, and last month, the EU followed suit. Garantex suspended services after Tether blocked its digital wallets.
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