Against a backdrop of ongoing sanctions over the war in Ukraine, Russia is facilitating some of its oil trade with China and India through Bitcoin and other cryptos to circumvent Western restrictions.
According to a Reuters report, Russian oil companies and traders are gradually expanding the use of bitcoin and crypto transactions. Data shows that the relevant monthly transaction volume has reached tens of millions of dollars, becoming an emerging means of circumventing sanctions.
The transaction process is as follows:
Oil Purchase: A Chinese or Indian buyer enters into an oil purchase agreement with Russia;
Fiat currency deposit: the buyer deposits RMB or Indian rupees into an offshore account controlled by an intermediary;
Exchange of crypto assets: the intermediary exchanges fiat currency for Bitcoin or other cryptos;
Transfer of funds: crypto assets are transferred to accounts in Russia and eventually converted into rubles.
As Western sanctions tighten, Russia is increasingly turning to cryptocurrencies for cross-border oil transactions. While crypto payments still represent a small fraction of Russia’s $192 billion annual oil trade, their usage is steadily expanding as traditional financial channels become more restricted.
This shift follows a pattern seen in other sanctioned nations like Iran and Venezuela, which have previously leveraged Bitcoin and other digital assets to bypass global financial monitoring systems. Due to their censorship-resistant nature, cryptocurrencies provide an alternative settlement method outside the reach of traditional banking oversight.
Government Support for Crypto in Foreign Trade
By the end of 2024, Russia’s finance minister publicly backed the use of cryptocurrencies in international trade, aligning with the Kremlin’s broader strategy to counter financial restrictions imposed due to the Russia-Ukraine conflict. In line with this, the Central Bank of Russia has proposed legalizing crypto investments for high-net-worth individuals, signaling a shift in regulatory policy.
Crypto’s Role in the Future of Russian Oil Trade
For now, Russia’s oil trade remains largely settled in legal tender, but the increasing use of Bitcoin and other digital assets suggests a long-term effort to reduce reliance on the US dollar and the Western-dominated financial system.
Meanwhile, the Trump administration in the U.S. is reportedly considering easing some restrictions on Russia in a bid to improve bilateral relations, which could impact Moscow’s crypto-based trade strategies.