Russia sells oil to China and India using cryptocurrencies.

Four people with knowledge of the matter claim that Russia is evading Western sanctions by selling oil to China and India using cryptocurrencies.

The use of digital currencies in oil transactions has not before been documented, despite Russia’s support for them and the passage of a law last year permitting their use in international trade.

Some Russian oil businesses are converting Chinese yuan and Indian rupees into Russian rubles using Bitcoin, Ethereum, and stablecoins like Tether, according to a report by Reuter. This approach helps to circumvent restrictions and expedite transactions. 

According to one insider, “even if sanctions are lifted and the dollar can be used again, cryptocurrency would probably continue to be used in Russian oil trading.” Although cryptocurrency makes up a modest portion of Russia’s oil trade, which was valued at $192 billion last year, the International Energy Agency reports that it is expanding.

Cryptocurrency has already helped nations like Venezuela and Iran maintain their economies by avoiding the US dollar, which controls the world’s oil trade. Today, Russia is doing the same. For instance, since Washington reinstated sanctions, Venezuela has expanded the use of digital currency in its petroleum and crude exports.

Tether is only one of several payment systems that Russia has in place, according to a fifth source, a researcher who studies the use of cryptocurrency in sanction evasion. The Russian central bank has refrained from commenting, but it acknowledged last year that sanctions-related payment delays posed a significant economic burden.

According to reports, one Russian oil broker sells tens of millions of dollars worth of cryptocurrency to China every month. According to two sources, a Chinese buyer uses an offshore account to pay a trading company in yuan. After that, the business transforms the funds into cryptocurrency, transfers them between accounts, and then converts them to Russian rubles.

Russia’s oil trade is still dominated by traditional currencies, despite the growing popularity of cryptocurrencies. Additionally, certain payments are made in UAE dirhams. Following Tether’s blocking of its wallets, the Russian cryptocurrency exchange Garantex, which was sanctioned by the US in 2022 and the EU last month, halted operations.

The United States’ stance on Russian sanctions is unclear. Former President Donald Trump has stated that he may impose even stricter limitations, despite rumors that the White House is considering easing some of the penalties.