Russian companies are increasingly making use of the use of cryptocurrencies to facilitate trade with China and India. It helps them avoid Western sanctions and avoid the use of traditional bank channels.
Bitcoin, Ether, and stablecoins like Tether are employed in such transactions, sources say. They enable the exchange of Chinese yuan and Indian rupees to Russian roubles efficiently.
Russia legalized foreign payment in digital currency in the past year. But its use in the oil trade remained unknown until recently. Some companies utilize crypto because it is quick and malleable. Russia’s oil trade accounted for $192 billion last year, the International Energy Agency reported. While crypto transactions make up only a small share of this trade, they are rising steadily.
U.S.-sanctioned nations such as Iran and Venezuela have also used crypto to prop up their economies. Russia appears to be following the same path. After the U.S. reimposed sanctions on Venezuela, the country increased the use of digital currencies for the exportation of crude and fuels.
Russia also created alternative payment channels, with one such being USDT. Chinese Russian oil purchaser typically makes payments to trading houses in the form of the yuan. The house converts the amount into cryptocurrency and forwards it through offshore accounts before it is converted into Russian roubles.
Russian oil traders handle millions in crypto transactions
Russian oil traders deal with tens of millions of dollars per month in such transactions. Most Russian oil trade is carried on with traditional currencies, with the UAE dirham being another possibility.
The Russian central bank has acknowledged payment delay due to sanctions as an economic challenge. It hasn’t commented on the role played by crypto in trade.
The US government continues to monitor such transactions. Washington recently sanctioned the Russian crypto exchange Garantex, which led to it being suspended. Digital wallets belonging to the platform were also blocked by Tether.
Despite these measures, analysts expect the use of crypto to persist in the Russian oil trade. Some experts are certain that its use will persist even if the sanctions are lifted. Crypto offers a speedier, more efficient way to make transactions, less dependent on traditional financial infrastructure.
Kremlin advisors acknowledge the role played by the use of digital assets in bypassing economic sanctions. Evidence by research agencies supports this claim, further affirming the belief that crypto is an effective bypass in cross-border trade.
Russia’s continuous use of digital assets to make oil transactions shows the new role of crypto in international trade. Governments and authorities should be expected to keep watching these events unfold as the financial infrastructure develops.
