Russia Turns to Cryptocurrencies to Facilitate Oil Trade with India and China

Russia has reportedly turned to cryptocurrencies as a means to facilitate oil trade with major partners like India and China, ostensibly aiming to bypass Western sanctions

Russia is reportedly using cryptocurrencies to trade oil with major partners like India and China, aiming to bypass Western sanctions that have constricted its economic activities.

While traditional fiat currencies, such as the UAE dirham, continue to play a major role in most transactions, there is an increasing presence of digital assets in the country’s energy sector.

According to multiple reports, including one by Reuters, Russian oil companies are using cryptocurrencies like Bitcoin, Ethereum, and stablecoins such as Tether to convert payments made in yuan and rupees into rubles.

A Chinese buyer might transfer yuan to an offshore trading company, which then converts the fiat currency into cryptocurrency. These digital assets are moved through a network of multiple accounts before being exchanged for rubles inside Russia, effectively circumventing traditional banking frameworks.

This method allows Moscow to reduce dependence on U.S. dollars, a critical pivot especially relevant given the legislative changes introduced in 2024 that permitted the use of digital currencies in international trade.

Notably, even as the Bank of Russia enforces a strict ban on domestic cryptocurrency payments, it has adopted a pragmatic stance, encouraging the use of digital currencies for cross-border transactions. This approach aligns with the government’s broader objective of maintaining economic stability in a challenging geopolitical landscape.

In a related development, the Bank of Russia proposed a three-year trial that would allow select high-net-worth individuals to engage in cryptocurrency trading, albeit under strict regulatory oversight.

This initiative, first reported by Interfax and later confirmed by Bloomberg, seeks to enhance market transparency while ensuring regulatory control over the burgeoning digital asset sector in the country.

The move comes in response to President Vladimir Putin’s directives to promote new technologies and counter Western sanctions.

Earlier this year, the Russian government approved a bill legalizing cryptocurrency payments for cross-border transactions, opening the door for broader adoption of digital assets within the country’s financial system.

The shift towards using virtual currencies is not new for countries facing international isolation.

Nations like Venezuela and Iran, also subject to U.S. sanctions, have turned to cryptocurrencies in their efforts to stabilize their economies. However, Russia’s substantial engagement in its energy trade with major partners marks a significant escalation in attempts to counter sanction pressures by leveraging the growing realm of digital finance.