Russian oil firms are using USDT, Bitcoin and Ethereum to evade Western sanctions and facilitate international trade, according to four anonymous sources with knowledge of the matter.
Speaking to Reuters, the sources reported that Russian oil companies have been using the three cryptocurrencies to convert Chinese yuan and Indian rupees into rubles.
Andrew Fierman, Head of National Security Intelligence at blockchain analytics firm Chainalysis, told Decrypt that cryptocurrency, “has, and will continue to play a role in facilitation of sanctions evasion” by Russia, citing the “general lack of access to the traditional financial ecosystem, due to the extensive and broad reaching sanctions” imposed on the country.
Crypto is now a growing if still minor part of Russia’s international oil and gas trade, which saw its revenues grow by 26% in 2024 to $108 billion—with one Russian oil trader’s sales to China now worth “tens of millions of dollars per month,” according to one source cited by Reuters.
Russia’s crypto-enabled oil trade usually works with a buyer of oil sending either yuan or rupees to an intermediary, who then converts payments into crypto and sends it onto Russia, where it is sold for rubles.
Most of Russia’s international oil trade still operates using fiat currencies, with use of the United Arab Emirates’ dirham becoming increasingly frequent in the wake of sanctions.
According to one source cited by Reuters, Russian oil firms may continue using cryptocurrencies even after sanctions are lifted, given the speed and convenience they can afford.
Fierman told Decrypt that the drive towards using crypto has come from the top of Russia’s political system, with the State Duma introducing “legislation late last year permitting cross-border payments” settled using cryptocurrencies.
“However, it’s not to say Russia won’t continue using more traditional methods to evade sanctions, including through the use of shell and front companies,” he added.
In fact, the push towards the cross-border use of crypto goes back a little further than last winter, given that the Central Bank of Russia advised businesses back in July 2024 that they should use digital assets and other alternative payments as a means of conducting international trade.
“New financial technology creates opportunities for schemes which did not exist before,” said CBR governor Elvira Nabiullina, speaking at a financial conference in St. Petersburg at the time. She explained that, “This is why we softened our stance on the use of cryptocurrencies in international payments, allowing the use of digital assets in such payments.”
This pronouncement was then followed by the aforementioned passage of legislation which legalized the use of crypto for cross-border trade, and which also enabled the CBR to transfer money overseas using private virtual currencies.
Speaking in July, Nabiullina affirmed that cross-border crypto payments would begin in the fall.
“We are already discussing the conditions of the experiment with ministries, agencies and businesses, and we expect that the first such payments will take place by the end of this year,” she said.
Large-scale sanctions evasion faces “challenges”: Chainalysis
Russia’s embrace of crypto isn’t without its challenges and vulnerabilities, according to Fierman.
“Russian entities seeking to evade sanctions run the risk of law enforcement disruption, as recently seen earlier this month with the seizure of Garantex’s domains and servers, in addition to the freezing of over $26 million in funds,” he told Decrypt.
Fierman also noted that the United Kingdom’s National Crime Agency disrupted a multi-billion dollar Russian money laundering network back in December, leading to more than 80 arrests and the seizure of more than $25 million in crypto and cash.
Not only is cryptocurrency usage often very traceable, but legislation is catching up to the growing use of crypto for sanctions evasion and money laundering.
Fierman explains, “As regulation continues to strengthen AML/CFT requirements, mainstream cryptocurrency exchanges will continue to protect against potential sanctions evasion through their platforms, which makes it more challenging to execute sanctions evasion at scale.”
As an example, Fierman cites how the European Union has prohibited the provision of cryptocurrency wallets, accounts and custody services to Russia or Russian persons, while the United States has issued dozens of sanctions designations in recent months against Russian entities involved in using cryptocurrency.
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