Russian oil companies are increasingly turning to cryptocurrencies such as Bitcoin and Tether's USDT to facilitate international trade with China and India.

This shift comes in response to ongoing international sanctions, according to a Reuters report.

As international sanctions continue to affect Russian companies, they are increasingly turning to cryptocurrencies like Bitcoin and Tether’s USDT to facilitate international trade with China and India, sources told Reuters.

The report, published on March 14, adds that the Russian oil companies are using the crypto assets to process payments in transactions with major Asian buyers.

One oil trader is reportedly carrying out monthly transactions worth tens of millions of dollars using digital assets, as confirmed by a source who requested anonymity due to a non-disclosure agreement.

Late last year, the Russian finance minister publicly stated that the country is open to using assets like Bitcoin for foreign trade. However, the specific use of cryptocurrencies in oil transactions with China and India has not been previously reported.

Although this practice constitutes a small portion of Russia’s $192 billion oil trade, sources described it as a growing trend. A typical transaction, according to two sources, involves a Chinese buyer paying a middleman in yuan, who then converts the funds into cryptocurrency.

Intermediaries facilitating transactions

Reuters explained that Russia’s foreign oil trade in crypto involves intermediaries managing offshore accounts and facilitating transactions in the buyer’s local currency. In one instance, a Chinese buyer of Russian oil pays a trading company acting as a middleman in yuan into an offshore account.

This trading company, which holds a license in a third-party country and is not subject to U.S. sanctions, then converts the yuan into cryptocurrencies such as Bitcoin and Tether’s USDT for onward transfer to a Russian company’s account.

“The transactions are typically carried out in a third-party currency, such as the Chinese yuan, Indian rupee, or a cryptocurrency,” another source said.

Russia is not the only nation to be using digital assets for oil trade or to circumvent Western sanctions. Both Iran and Venezuela have also turned to cryptocurrencies to facilitate transactions and reduce their dependence on the U.S. dollar, the dominant currency in global oil markets.

Venezuela, in particular, increased its use of digital currencies after the U.S. reimposed sanctions on the South American nation, making it harder for the country’s oil traders to conduct transactions in dollars.