Amid the ongoing sanctions over the war in Ukraine, Russia relied on Bitcoin and other cryptocurrencies to promote some of the oil trade between China and India's major buyers.
Reuters reports that Russian oil companies and traders are increasingly trading in Bitcoin and crypto, allowing them to avoid restrictions from Western countries. Sources say monthly trade volumes are already in the tens of millions of dollars.
This mechanism involves the purchase of oil by a Chinese or Indian buyer and depositing the yuan or rupees into an offshore account owned by the original company. The intermediary then converts the Fiat currency into a crypto, transfers it to a Russian account, where it is exchanged for the ruble.
Crypto-based oil payments are just a small portion of Russia's total oil trade, but practices have increased as sanctions chew. This trend underscores the usefulness of Bitcoin and crypto in enabling transaction settlements in approved countries. Iran and Venezuela have adopted similar crypto strategies. The censorship resistance of Bitcoin and Crypto allows for the transfer of value beyond the scope of sanctions.
In late 2024, the Russian Finance Minister publicly supported it in foreign trade using cryptography. The Kremlin views Bitcoin and crypto as one of several effective strategies to overcome the financial penalties imposed on Ukrainian invasions. The Bank of Russia recently proposed legalizing crypto investment for wealthy citizens.
However, Russia's oil trade is primarily dependent on Fiat currency. President Donald Trump's administration is debating whether to ease some restrictions to improve relations with Moscow.
With the Ukrainian conflict still not resolved, Russia's extremely strong approach to using Bitcoin and decentralized technology appears to be aiming to reduce its reliance on traditional financial and dollar settlements. Other countries could be closely monitored under US sanctions.
