Russia Uses Crypto to Bypass Sanctions in Oil Trade with China, India: Report

Russia has increasingly turned to cryptocurrencies to facilitate its oil trade with China and India, allowing it to bypass Western sanctions, sources familiar with the matter told Reuters .

While Moscow has openly encouraged digital currencies for international trade, its direct use in oil exports has remained largely undisclosed until now.

The country also passed a law last summer to legalize crypto payments in cross-border transactions.

Crypto Plays a Growing Role in Russian Oil Transactions

Sources reveal that some Russian oil companies are using Bitcoin (BTC), Ethereum (ETH), and stablecoins like Tether (USDT) to simplify currency exchanges between Chinese yuan, Indian rupees, and Russian roubles.

Although crypto transactions represent only a small fraction of Russia’s $192 billion oil industry, they are gaining traction as a workaround to avoid reliance on the U.S. dollar, which dominates global energy markets.

All sources declined to be identified due to the sensitivity of the subject.

Russia’s adoption of crypto for oil payments follows a trend seen in other sanctioned economies, such as Iran and Venezuela.

These countries have long leveraged digital assets to sustain trade flows while avoiding dollar-based financial restrictions.

Venezuela, in particular, accelerated its use of crypto for crude and fuel exports after Washington reimposed sanctions.

Two sources describe a multi-step process for using cryptocurrency in oil trade: A Chinese buyer deposits yuan into an offshore account controlled by an intermediary, which then converts the funds into crypto.

The digital assets are transferred to another account before being sent to a Russian entity, where they are exchanged for roubles to complete the transaction.

This method provides an efficient alternative to traditional banking channels, which have become increasingly restricted due to financial sanctions.

One source familiar with Russian oil trading noted that some crypto-based transactions amount to tens of millions of dollars per month.

Despite the growing role of digital currencies in Russian oil trade, traditional fiat currencies still dominate the majority of transactions.

Analysts highlight that alternatives such as the UAE dirham and other regional currencies are also being used as part of a broader strategy to circumvent financial restrictions.

The use of crypto has not gone unnoticed by regulators. The Russian central bank has yet to comment on these developments, though it previously acknowledged that sanctions-related payment delays are a significant challenge for the country’s economy.

Meanwhile, the U.S. and European Union have intensified efforts to crack down on Russia’s crypto-related activities.

The Russian crypto exchange Garantex was sanctioned by the U.S. in 2022 and later by the EU in February.

Following additional enforcement measures, Tether recently blocked digital wallets associated with Garantex, forcing the platform to suspend operations last week.

Will Crypto Continue to Be Used in Russian Oil Trade?

Although former U.S. President Donald Trump has signaled a desire to improve relations with Russia as part of efforts to end the war in Ukraine, the future of economic sanctions remains uncertain.

While Reuters reported that the White House is considering options for easing sanctions, Trump stated on March 7 that he is strongly considering additional financial restrictions on Russia.

Despite potential policy shifts, sources believe that crypto will likely remain a key tool in Russian oil trade, even if sanctions are lifted and the dollar becomes viable again.

The speed, privacy, and efficiency of digital transactions make them an attractive long-term solution for circumventing financial barriers.