Russia Turns to Cryptocurrency for Oil Trade with China and India Amid Western Sanctions
Russia is increasingly using cryptocurrencies like bitcoin and ether to conduct a small but growing portion of its oil trade with China and India, helping it navigate around Western sanctions, Reuters reported Friday. Four sources with direct knowledge of the transactions, speaking anonymously due to the sensitive nature of the dealings, confirmed the development.
Russian oil companies are leveraging digital currencies, including stablecoins like USDT, through intermediaries to convert Chinese yuan and Indian rupees into rubles. This shift follows sanctions imposed after Russia’s invasion of Ukraine, which have complicated traditional banking channels with key trade partners. One source familiar with a Russian oil trader’s operations noted that these crypto transactions with China alone are worth tens of millions of dollars monthly.
The move builds on legislative changes in December, when Russia legalized cryptocurrencies for international payments to counter sanctions, according to Finance Minister Anton Siluanov. While domestic use of crypto for purchases remains banned, the country is adapting it for global trade. Blockchain analytics firm Chainalysis reported in September that Russia’s central bank has been developing crypto infrastructure to evade Western restrictions, though this is the first confirmed use in the nation’s $192 billion annual oil industry.
A Strategic Workaround
Senior Russian official Anton Gorelkin recently emphasized that cryptocurrencies remain a powerful tool for bypassing sanctions, a point underscored by new EU penalties on the Russian crypto exchange Garantex, already sanctioned by the U.S. since 2022. Meanwhile, a Kremlin adviser described crypto as one of several methods Russia employs to address payment challenges, signaling a broader strategy.
Russia isn’t alone in this approach. Sanctioned nations like Iran and Venezuela have similarly turned to digital currencies to sustain their economies, with Venezuela ramping up crypto use for oil exports after U.S. sanctions tightened last year.
Domestic Crypto Evolution
While Russia permits individuals to own cryptocurrencies, their use as payment within the country is prohibited, and trading faces strict limits. However, a new three-year pilot program announced this week by Russia’s central bank could ease restrictions for “qualified investors”—those with significant wealth or income—and eligible companies. This follows years of cautious policy, including a 2022 ban on crypto payments signed by President Vladimir Putin.
In November, Russia’s parliament approved a bill taxing crypto transactions, classifying digital currencies as property and setting income tax rates at 13% or 15%, depending on earnings. Putin also legalized crypto mining last year, establishing a regulated framework, though some regions restrict the energy-intensive practice.
The central bank is also advancing its digital ruble, a state-backed digital currency set for a phased rollout in 2025, though it maintains that cryptocurrencies won’t be recognized as legal tender domestically.
Global Implications
As U.S. President Donald Trump signals interest in warmer ties with Russia and an end to the Ukraine conflict, the future of sanctions remains unclear. Regardless, sources say crypto’s convenience and speed will likely keep it a fixture in Russia’s oil trade. For now, this digital shift offers a glimpse into how sanctioned nations are rewriting the rules of global commerce—one transaction at a time.