Russia is employing cryptocurrencies like bitcoin and Tether in its oil trade with China and India to circumvent Western sanctions. This strategy facilitates currency conversion, enhancing operational efficiencies. The move follows a global trend where sanctioned countries use digital currencies to sustain their economies amidst declining access to traditional banking mechanisms.
Recent reports indicate that Russia is utilizing cryptocurrencies in its oil transactions with China and India to circumvent Western sanctions. Sources familiar with the matter revealed that certain Russian oil companies are employing bitcoin, ether, and stablecoins like Tether to facilitate currency conversions with trading partners. This development follows a law passed in Russia that encourages the use of digital currencies in international trade, although its application specifically to the oil trade had not been previously reported.
These cryptocurrencies are being used to convert Chinese yuan and Indian rupees into Russian roubles, representing a small, yet increasingly significant, segment of Russia’s total oil trade, which amounted to $192 billion last year. Individuals involved in the transactions have requested anonymity due to the sensitive nature of this information.
Historically, cryptocurrencies have enabled countries facing U.S. sanctions, such as Iran and Venezuela, to maintain their economies by avoiding reliance on the dollar, the primary currency in global oil transactions. This trend is mirrored in Russia’s recent actions, emulating Venezuela’s increased use of digital currency amid renewed sanctions.
In addition to Tether, various systems have been set up by Russia to utilize cryptocurrencies for oil trade. According to an unnamed researcher associated with investigations into the circumvention of sanctions through digital currencies, the Russian central bank previously acknowledged the challenges posed by delays in payments due to sanctions.
Though negotiations surrounding U.S. sanctions and Russia’s relations under President Trump remain uncertain, sources suggest that the use of crypto in oil trading may persist, even if sanctions are lifted. It is deemed an efficient method to expedite operations. For instance, a Chinese buyer might pay a trading company in yuan into an offshore account, which is subsequently converted into cryptocurrency and transferred to Russian accounts, where it is exchanged into roubles.
Crypto transactions for one Russian oil trader’s exports to China reportedly reach tens of millions of dollars monthly. Nevertheless, traditional currencies still dominate Russia’s oil business, while some alternative measures include utilizing the UAE dirham. Notably, Garantex, a Russian crypto exchange, faced sanctions from both the U.S. and the EU and recently suspended operations after Tether applied restrictions on its wallets. Overall, cryptocurrencies remain one of numerous strategies to address payment hurdles facing Russia amidst ongoing sanctions.
In summary, Russia is increasingly using cryptocurrencies to facilitate its oil trade with China and India, effectively bypassing Western sanctions. This strategy reflects a broader trend among sanctioned nations leveraging digital currencies to maintain economic activity. While traditional currencies still dominate the market, the growing reliance on crypto indicates a shift in trade practices that may continue irrespective of future political developments.
Original Source: www.hindustantimes.com
