Bitcoin and Ethereum Used to Circumvent Western Restrictions
Russian oil companies are increasingly using Bitcoin, Ethereum, and USDT to evade Western sanctions and facilitate international trade, according to sources cited by Reuters. These firms reportedly convert Chinese yuan and Indian rupees into rubles via crypto transactions, bypassing traditional financial restrictions.
Blockchain analytics firm Chainalysis confirmed that cryptocurrency has played a growing role in Russia’s financial strategy since sanctions intensified in 2022. Andrew Fierman, Head of National Security Intelligence at Chainalysis, explained that the broad restrictions on Russian financial institutions have pushed businesses toward alternative payment methods, with crypto offering speed and anonymity in cross-border settlements.
How Russia’s Crypto-Based Trade Works
The process typically involves foreign buyers sending yuan or rupees to intermediaries, who then convert the funds into crypto and send them to Russian oil companies. The companies subsequently sell the crypto for rubles, enabling them to maintain cash flow despite restrictions on fiat-based transactions.
While the majority of Russia’s $108 billion oil and gas trade still relies on fiat currencies, crypto transactions are gaining popularity. The UAE dirham has also become a frequently used currency for Russian oil trades, further highlighting efforts to avoid reliance on Western financial systems.
Government Support and New Legislation
Russia's State Duma passed legislation last year permitting cross-border crypto payments, reflecting official endorsement of digital assets for international trade. The Central Bank of Russia (CBR) previously opposed crypto but later softened its stance, advising businesses to explore digital assets and alternative payment systems.
CBR Governor Elvira Nabiullina acknowledged that emerging financial technologies enable new payment methods and confirmed that cross-border crypto transactions began in late 2024.
Challenges and Risks of Crypto Sanctions Evasion
Despite its advantages, using crypto for large-scale transactions poses challenges. Authorities worldwide are strengthening AML (Anti-Money Laundering) regulations to limit illicit activity. Chainalysis noted that the UK recently disrupted a multi-billion-dollar Russian money laundering network, leading to over 80 arrests and the seizure of $25 million in cash and crypto.
Additionally, the European Union has banned crypto wallet services for Russian citizens, while the US Treasury has issued sanctions against crypto entities linked to Russian transactions. These enforcement efforts highlight the risks Russian firms face when relying on digital assets to skirt sanctions.
