Russia uses cryptocurrency to sell oil to China and India

Russia is using cryptocurrency to sell oil to China and India, finding a way around Western sanctions, according to four sources familiar with the situation. 

While Russia has supported digital currencies and passed a law last year allowing them in international trade, their use in oil deals has not been reported before.

According to Reuter’s report, some Russian oil companies are using Bitcoin, Ethereum, and stablecoins like Tether to convert Chinese yuan and Indian rupees into Russian rubles. This method helps speed up transactions and avoid restrictions. 

“Crypto would likely continue to be used in Russian oil trading, even if sanctions are lifted and the dollar can be used again,” one source said. According to the International Energy Agency, Russia’s oil trade was worth $192 billion last year, and though crypto is a small part, it is growing.

Countries like Iran and Venezuela have already used cryptocurrency to keep their economies by avoiding the U.S. dollar, which dominates the global oil trade. Russia is now following a similar path. Venezuela, for example, has increased digital currency use in its crude and fuel exports since Washington reimposed sanctions.

A fifth source, a researcher tracking crypto use in sanction evasion, said Russia has multiple payment systems in place, and Tether is just one of them. The Russian central bank has not commented, but last year, it admitted that payment delays caused by sanctions were a major challenge for the economy.

One Russian oil trader reportedly does crypto transactions worth tens of millions of dollars each month for sales to China. Two sources explained that a Chinese buyer pays a trading company in yuan through an offshore account. The company then converts the money into crypto, sends it through different accounts, and finally, it’s converted to roubles in Russia.

Despite the growing use of crypto, traditional currencies still dominate Russia’s oil trade. Some payments are also being made in UAE dirhams. Russian crypto exchange Garantex, sanctioned by the U.S. in 2022 and the EU last month, suspended services after Tether blocked its wallets.

U.S. policy on Russian sanctions is uncertain. While some reports suggest the White House is considering lifting certain sanctions, former President Donald Trump has said he may impose even tougher restrictions. 

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