Russia has started using crypto for oil trades with China and India as it seeks to bypass Western sanctions, Reuters reported on March 14, citing sources familiar with the matter.
According to the report, some Russian oil companies have settled trades in Bitcoin, Ethereum, and stablecoins like Tether’s USDT. This strategy simplifies the conversion of Chinese Yuan and Indian Rupees into Russian Rubles, enabling smoother transactions despite financial restrictions.
Typically, a Chinese buyer deposits Yuan into an offshore account controlled by an intermediary. The funds are then converted into crypto and transferred through multiple accounts before reaching a final destination in Russia, where they are exchanged for Rubles.
These transactions reportedly reach tens of millions of dollars per month.
Although crypto adoption in Russia’s oil trade remains limited, it is part of a broader trend. Over the past year, the country has introduced new regulations governing crypto mining, taxation, and international trade.
Western sanctions imposed over Russia’s military actions in Ukraine have accelerated this shift toward digital assets. However, industry sources suggest oil firms may continue using cryptocurrencies even if sanctions are lifted due to their efficiency and transaction speed.
Digital rubles challenges
While Russia increases its reliance on crypto for trade, its Central Bank Digital Currency (CBDC) project is facing significant hurdles.
Last month, Central Bank Governor Elvira Nabiullina announced an indefinite delay in the launch of the digital ruble. She attributed the setback to the need for further refinements to ensure that the currency benefits all stakeholders.
However, a recent survey indicates that the digital ruble launch was postponed due to the inadequate IT infrastructure of banks that were expected to handle the project.
The survey of Russian banking experts revealed that 30% of financial institutions are not yet prepared to support the digital ruble. Experts explained that implementing the CBDC requires banks to upgrade their IT systems to handle increased transaction volumes.
Meanwhile, 20% of banking IT specialists stated that their systems are fully equipped for the digital ruble. Another 50% said they are partially prepared but need further upgrades.
At the same time, around 14% of the respondents expressed concerns over potential information security risks associated with the currency.
Given these challenges, Russia’s national digital asset initiative could face further obstacles unless major financial institutions fully prepare for its adoption.
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