According to sources, Russia depends on cryptocurrencies to trade oil

14 March (Reuters) – Four people with direct knowledge of the situation claim that Russia is evading Western sanctions by using cryptocurrencies in its oil transactions with China and India.

Although a law allowing digital currency payments in international trade was passed last summer and Russia has openly promoted the use of cryptocurrency, its application in the nation’s oil sector has not yet been documented.

According to the sources, some Russian oil companies are utilizing bitcoin, ether, and stablecoins like Tether to facilitate the exchange of Chinese yuan and Indian rupees for Russian rubles. This is a minor but expanding aspect of Russia’s overall oil trade, which the International Energy Agency estimates was valued at $192 billion last year.

Because of the delicate nature of the subject, all of the sources agreed not to be named.

Cryptocurrencies have already made it possible for nations like Iran and Venezuela that are subject to U.S. sanctions to continue operating their economies without using the dollar, which is the preferred currency for transactions in the world oil market.

Following Washington’s reimposition of sanctions, Venezuela increased the usage of digital money in its petroleum and crude exports, prompting Russia to take action.

According to a fifth source, a researcher at an investigative firm that monitors the use of cryptocurrencies for sanctions circumvention, Russia has established a number of systems, and USDT (Tether) is just one of them. The source asked not to be named due to a non-disclosure agreement.

A request for comment from the Russian central bank was not answered. Last year, it stated that sanctions-related payment delays had grown to be a significant problem for the Russian economy.

Although it is uncertain if sanctions will be lifted, U.S. President Donald Trump is working to strengthen ties with Russia as he advocates for an end to the conflict in Ukraine. Trump stated on March 7 that he is seriously considering new penalties on Russia, despite Reuters reporting that the White House was developing alternatives for sanctions relief.

One of the four sources stated that even if sanctions are removed and the dollar is once again usable, cryptocurrency would probably still be used in Russian oil transactions. They said that it is a useful tool that speeds up procedures.

According to two people with knowledge of the transactions, a Chinese buyer of Russian oil pays a trading company that acts as a middleman in yuan into an offshore account as an illustration of how the trade operates.

According to them, the intermediary turns this into cryptocurrency, moves it to another account, and then sends it to a third account in Russia, where it is changed to rubles.

According to one person acquainted with the trader’s activities, cryptocurrency transactions for one Russian oil trader’s sales to China amount to tens of millions of dollars each month.

According to researchers, the majority of Russia’s oil transactions still take place in traditional currencies, with the UAE dirham being one example of a workaround.

In 2022, the United States imposed sanctions on Garantex, a Russian cryptocurrency exchange, and the European Union did the same last month. After Tether disabled digital wallets on its network last week, the platform suspended operations.

One of the sources, who advises the Kremlin, said that there are other ways to circumvent payment problems, including using cryptocurrencies. That opinion is also supported by analysis from the Centre for Information Resilience and the Royal United Services Institute in the United Kingdom.