Russia has turned to cryptocurrencies to facilitate oil trade with China and India, effectively bypassing Western sanctions in its $192 billion oil trade, Reuters reported, citing sources familiar with the matter.
The country has been slowly moving deeper into the cryptocurrency space. Just this week, the Bank of Russia submitted proposals to create an experimental legal regime (ELR) lasting three years, allowing a “limited group of Russian investors” to trade cryptocurrencies.
Some Russian oil firms use bitcoin, ether, and stablecoins such as Tether (USDT) to convert payments made in Chinese yuan and Indian rupees into roubles, the Reuters report said. These transactions currently represent a fraction of Russia’s oil trade.
Other sanctioned countries, including Iran and Venezuela, have used crypto to maintain trade while avoiding reliance on the U.S. dollar, the dominant currency in global oil markets.
Russia has developed multiple payment systems to navigate sanctions, and crypto is one of several tools the country uses. Fiat currencies remain the primary method used in Russia’s oil transactions, and other workarounds include using currencies such as the United Arab Emirates dirham, Reuters said.
The report also added that even if sanctions were lifted, Russia would likely keep using crypto in its oil trades as it’s seen as a convenient, flexible tool. The country, meanwhile, is currently looking to get its largest banks to support a digital ruble for retail and commercial use.
The Bank of Russia said that a ruble-backed central bank digital currency could be used as a tool against sanctions back in 2021.
Read more: U.S.-Sanctioned Countries Such as Iran Leaning Heavily Into Crypto: Chainalysis