While Russia has previously signaled interest in adopting digital currencies for international trade, this is the first time its use in oil transactions has been revealed. 

According to a Reuters report, some Russian oil companies are utilizing Bitcoin (BTC), Ethereum (ETH), and stablecoins such as Tether (USDT) to streamline the conversion of Chinese yuan and Indian rupees into Russian roubles. This method, while currently a small portion of Russia’s $192 billion oil trade, is reportedly expanding.‍

A Growing Strategy for Sanctions Evasion

The use of cryptocurrencies in energy transactions is not new. Countries such as Iran and Venezuela have previously used digital assets to navigate US financial restrictions. In Venezuela’s case, the country ramped up its reliance on crypto after Washington reimposed sanctions on its crude and fuel exports.

A source at a global investigations firm tracking sanctions circumvention stated that Russia has set up multiple payment systems, with crypto playing a growing role. The source, who declined to be identified due to a non-disclosure agreement, explained that stablecoins like Tether (USDT) have been particularly useful in enabling fast and discreet transactions.‍

How Crypto-Powered Oil Payments Work

According to industry insiders, Russian oil companies use a layered transaction system to move funds without triggering Western financial restrictions. A Chinese oil buyer typically deposits yuan into an offshore account controlled by a third-party trading firm, which then converts the funds into cryptocurrency. The digital assets are transferred through multiple accounts before ultimately being exchanged for roubles in Russia.

One Russian oil trader handling sales to China reportedly processes tens of millions of dollars in crypto transactions each month. Traditional fiat currencies still dominate Russia’s oil trade, but digital assets have emerged as a fast and convenient alternative, sources said.‍

Impact of Sanctions and Regulatory Challenges

The Russian central bank has previously acknowledged that sanctions-related payment delays pose a significant challenge to the economy but has not commented on the recent developments in cryptocurrency usage. Meanwhile, US and European authorities have taken steps to crack down on Russian crypto transactions.

One prominent Russian crypto exchange, Garantex, was sanctioned by the US Treasury Department in 2022 and faced additional EU restrictions last month. The platform suspended services last week after Tether blocked digital wallets associated with it.

Although former US President Donald Trump has expressed interest in improving US-Russia relations and has suggested potential sanctions relief, uncertainty remains. The White House has reportedly drafted options for easing restrictions, but Trump recently stated he is also considering tougher sanctions on Russia.

A source close to the Kremlin suggested that cryptocurrency will continue to play a role in Russian oil trading, regardless of any future sanctions adjustments. The source emphasized that digital assets offer efficiency and discretion, making them an attractive long-term tool for cross-border transactions.