As international sanctions continue to isolate Russia, the country is increasingly turning to cryptocurrencies like Bitcoin and Tether (USDt) to facilitate trade, particularly in the oil sector.
Russian oil companies, facing barriers in traditional banking systems due to these sanctions, have found crypto assets to be a convenient and efficient alternative to continue trading with countries like China and India.
Sources familiar with the matter revealed to Reuters that Russia's oil industry is conducting multimillion-dollar transactions using cryptocurrencies every month.
One major oil trader, speaking on the condition of anonymity, confirmed that digital assets such as Bitcoin and USDt are now integral to Russia's oil dealings.
The use of cryptocurrencies in this context allows Russia to bypass traditional banking routes, which have been blocked or heavily restricted due to Western sanctions.
Despite the Russian finance minister declaring in late 2024 that the country is free to use assets like Bitcoin for foreign trade, the details of how these cryptocurrencies are facilitating oil deals with China and India had not been widely reported until now.
The process behind Russia's foreign oil transactions involving crypto is complex but effective.
According to Reuters' sources, intermediaries play a crucial role.
These middlemen manage offshore accounts and handle the conversion of payments into digital assets.
For example, a Chinese buyer of Russian oil may send payment in yuan to a trading company, acting as an intermediary.
This company then converts the yuan into cryptocurrency and transfers it to an offshore account.
From there, the funds are moved to a third account in Russia, where they are exchanged for Russian rubles.
This system helps keep transactions flowing smoothly, despite the pressure of sanctions.
One source noted that using crypto in such dealings is an essential tool that "helps run operations faster."
This method of conducting trade is likely to persist, even if sanctions are eventually lifted, due to its efficiency and speed.
In a related move, Russia's central bank has proposed legalising cryptocurrency investments for high-net-worth individuals.
Those holding at least $1.1 million in securities and deposits would be allowed to engage in cryptocurrency investments, marking a significant shift in the country’s approach to digital currencies.
While Russia continues to embrace cryptocurrencies for foreign trade, China remains cautious and restrictive regarding digital assets.
The Chinese government has enforced a strict ban on most cryptocurrency transactions since 2021.
However, the country still leads in Bitcoin mining, despite the ban, raising questions about its true stance on the growing influence of digital assets.
Source: X @Cointelegraph
In recent years, Hong Kong has positioned itself as a global crypto hub, while mainland China maintains a more restrictive approach.
Some industry observers believe that China will eventually adapt to the global rise of Bitcoin and its impact on the international financial system.
The exact extent of China's Bitcoin holdings remains unclear.
Data from Bitcoin technology company Jan3 suggests that the Chinese government may be holding as much as 194,000 BTC, adding further complexity to the country’s crypto policy.
While Beijing’s stance on cryptocurrency is restrictive, the massive reserves of Bitcoin raise questions about the broader strategy and potential future changes.
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