Russia uses cryptocurrency to trade oil to circumvent sanctions

Russia is using cryptocurrency in its oil trade with China and India to circumvent Western sanctions.

Reutersreported, citing four sources familiar with the matter.

Although Russia has publicly encouraged the use of cryptocurrencies and last summer passed a law allowing international trade payments in digital currency, their use in the country’s oil trade has not previously been reported.

Some Russian oil companies are using bitcoin, ether and stablecoins such as Tether to facilitate the conversion of Chinese yuan and Indian rupees into Russian rubles. The sources said it is a small but growing part of Russia’s total oil exports, which last year amounted to $192 billion, according to the International Energy Agency.

Cryptocurrency has already helped sanctioned countries like Iran and Venezuela keep their economies running by avoiding the use of the dollar, the main currency for transactions in the global oil market.

Russia took the step after Venezuela accelerated its use of digital currency in its oil and fuel shipments after Washington reimposed sanctions.

Russia has created a number of alternative systems, and USDT (Tether) is just one of them.

US President Donald Trump is seeking to improve relations with Russia by promoting an end to the war in Ukraine, but it remains unclear whether he will ease sanctions against the aggressor country. sanctions lifted.

Cryptocurrency is likely to continue to be used in Russian oil trade even if sanctions are lifted and the dollar can be used again.

In an example of how the scheme works, two sources said, a Chinese buyer of Russian oil transfers money in yuan to an offshore account of a trading company that acts as an intermediary.

The intermediary converts the funds into cryptocurrency and transfers them to another account, from where they are then routed to a third account in Russia and exchanged for rubles.

For one Russian oil trader, the volume of cryptocurrency transactions for oil sales to China is tens of millions of dollars a month, one of the sources familiar with the operations said.

Analysts say traditional currencies still make up the bulk of Russia’s oil deals. Other workarounds include using the UAE dirham.

Russian cryptocurrency exchange Garantex was hit with U.S. sanctions in 2022 and last month by the EU. The platform suspended operations last week after Tether blocked digital wallets on its service.

Cryptocurrency is one of many ways to solve payment problems, said one of the sources advising the Kremlin. Analysis by the UK’s Royal United Institute for Defence Research and the Information Resilience Centre also supports this view.

Earlier, USM reported that Britain had lifted sanctions on a Turkish shipowner whose vessels were operating in Russia.