Reports have emerged suggesting that Russia is utilizing digital currencies to manage its oil trade with China and India, a measure seemingly aimed at bypassing Western sanctions. Four sources privy to the matter have shared this previously unreported detail.
Russia, having shown a public interest in cryptocurrencies, passed a law last summer promoting the use of digital currencies for international trade payments. Despite this, the country’s use of cryptocurrencies in oil trade remained undisclosed until now.
According to the sources, Russian oil companies are leveraging Bitcoin, Ether, and Tether (stablecoins) to facilitate the conversion of Chinese yuan and Indian rupees into Russian roubles. They pointed out that although it currently represents a minor portion of Russia’s total oil trade (valued at $192 billion by the International Energy Agency in the previous year), it is a growing component.
Previously, cryptocurrencies have proven beneficial for countries like Iran and Venezuela, under U.S. sanctions, in maintaining their economies functional while steering clear of the dollar – the global oil market’s preferred currency. Following the reinstatement of sanctions by Washington, Venezuela has increased its use of digital currencies in crude and fuel exports. Similarly, Russia is turning to cryptocurrencies for the oil trade.
One source, an investigator at a firm tracking the use of cryptocurrencies for sanctions evasion, said that Russia has developed several systems, with USDT (Tether) being just one of them. This source preferred to remain anonymous due to a non-disclosure agreement.
The Russian Central Bank has yet to comment on these claims. However, last year it acknowledged that sanction-related payment delays had become a significant issue for the Russian economy.
Even if sanctions are lifted, cryptocurrencies will likely continue to play a role in Russian oil trade, one source claimed. The ease and speed of operations they offer make them a handy tool.
As an illustration of how the trade operates, a Chinese buyer pays a trading company (acting as an intermediary) in yuan. This intermediary then converts the payment into cryptocurrency and transfers it to another account. From there, it is sent to a third account in Russia and converted into roubles.
For one Russian oil trader’s sales to China, monthly cryptocurrency transactions are worth tens of millions of dollars, according to a source familiar with the trader’s operations. Cryptocurrencies are just one of the several methods employed to circumvent payment issues, added a Kremlin advisor.
