Backup Crypto Exit: Russia is developing international digital payments despite initial government opposition

Since the end of 2024, Russia has officially permitted the use of cryptocurrencies in foreign trade as part of the framework of an experimental legal regime governed by the Central Bank. However, businesses had already been actively using them earlier when other settlement methods were unavailable. Before the war, the Central Bank was staunchly opposed to this, but by autumn 2022, it was forced to soften its stance.

Legalising the use of cryptocurrencies to bypass sanctions is a logical move. Russia’s alternative financial system is quite well developed. According to Central Bank estimates, Russians hold crypto assets worth 827 billion rubles, and transaction volumes over the past six months have reached 7.3 trillion rubles.

It is known that cryptocurrencies in foreign trade are used not only by small and medium-sized importers but also by major companies including, for example, those in the oil and metals sectors. Rosselkhozbank is in discussions with the Central Bank about using cryptocurrencies for grain trade settlements.

The largest known project in this space is the ruble-linked stablecoin A7A5, associated with PSB Bank, which services the Russian defence industry. In just four months of existence, the stablecoin has facilitated transactions worth $9.3 billion.

The main direction of development for Russian international settlements under sanctions will likely be the broader use of the ruble. Cryptocurrency schemes will remain as backup 'mirrors'. At the same time, of course, the regulatory easing granted for cryptocurrency use may serve purposes beyond the 'noble' goal of circumventing sanctions.

Since September 2024, Russian companies have been officially allowed to use cryptocurrencies in foreign trade under an experimental legal regime (ELR) regulated by the Central Bank (→ Re:Russia: Strict Experimental Regime Zone). Projects approved under the ELR are exempt from federal laws. A month earlier, cryptocurrency mining was finally legalised in Russia. By the end of the year, Finance Minister Anton Siluanov said that ‘bitcoins mined in Russia’ had begun to be used to pay for imports.

Allowing cryptocurrencies to bypass sanctions in foreign trade is a logical step º Russia’s alternative financial system is sufficiently developed. According to Vasily Girya, CEO of mining data centre operator GIS Mining, Russians’ crypto holdings exceeded 2 trillion rubles (over $25 billion) by the end of the first half of 2025, as stated at the St. Petersburg Economic Forum. In its recently published Financial Stability Review, the Central Bank offered a more conservative estimate: 827 billion rubles, with 62.1% held in Bitcoin, 22% in Ethereum, and 15.9% in USDT (Tether) and USDC stablecoins. At the same time, the volume of Russians' cryptocurrency transactions in Q4 2024 and Q1 2025 was assessed at 7.3 trillion rubles, or approximately $75.2 billion.

In practice, the experimental regime is another step by the Central Bank towards legalising cryptocurrency as a means of foreign payment. Previously, the Central Bank was firmly opposed to such legalisation in Russia, but by autumn 2022, it had to acknowledge its necessity in foreign trade operations. Nonetheless, the situation remained ambiguous.

Back in the summer of 2023, Rosbank announced the launch of cross-border payments for importers in partnership with a little-known company, B-crypto, registered at the end of 2022. The scheme, according to Vedomosti, was designed to circumvent the lack of formal authorisation for domestic crypto transactions: all crypto operations were conducted abroad, with only ruble transfers taking place within Russia. A Russian importing company had to include a provision in the contract allowing payment in cryptocurrency and indicate the supplier’s crypto wallet. Upon receiving an invoice from the counterparty, the company would transfer rubles to Rosbank, which would pass them on to B-crypto. The latter's structure would purchase cryptocurrency in a 'friendly jurisdiction' (the company’s website states it has crypto transaction infrastructure in Hong Kong and the UAE) and transfer it to the supplier. Thus, formally, the regulator would have no grounds for objection as no Russian company in the scheme was directly conducting crypto transactions.

It appears, however, that the Rosbank-B-crypto model is not the only scheme operating within the 'grey zone' of crypto regulation. As early as a year ago, when new US sanctions caused disruptions in Russia’s trade with China (→ Re:Russia: Beijing-style Friendship), Elvira Nabiullina admitted that the Central Bank had 'softened its position on the use of cryptocurrency in international payments' and hinted that it was deliberately turning a blind eye: 'I must say that business is very flexible… There are different ways they solve problems, and they don’t even share them with us. Maybe it’s for the best,' she said. The head of VTB, Andrey Kostin, added that his bank was involved in such operations and jokingly suggested the topic be classified 'Top Secret' as 'whatever steps we take, the West reacts very quickly.'

The use of cryptocurrency expanded rapidly. At least two large metallurgical firms, primarily for transactions with Chinese clients and suppliers, use the USDT (Tether) stablecoin and other cryptocurrencies, according to Bloomberg executives. Payments are routed through Hong Kong. Neither company is under sanctions, but both have experienced frozen accounts abroad. Moreover, crypto transfers are processed within seconds and incur lower costs.

Also, according to Reuters sources, Russian oil companies have begun using cryptocurrency to convert rupees and offshore yuan into rubles. The scheme described is similar to that used by Rosbank and B-crypto: a Chinese buyer transfers yuan to an intermediary account, which then converts them into cryptocurrency, sends the funds to another account to obscure the transaction trail, and finally transfers the crypto to a Russian account. The cryptocurrency is then converted into rubles. One source said such operations occur regularly in trade with China, though on a relatively small scale. We are talking about tens of millions of dollars per month. For comparison, in May, China purchased more than $6.5 billion worth of Russian oil. The possibility of using cryptocurrencies for settlements in grain trade with the Central Bank is being discussed by Rosselkhozbank.

The first moderately large-scale cryptocurrency project came to light this week from a Financial Times investigation. In late February, a new stablecoin called A7A5, pegged to the Russian ruble, was launched on the Grinex cryptocurrency exchange in Kyrgyzstan. As of now, 12 billion tokens are in circulation, with a total value of around $156 million. However, they are bought and sold so actively that daily transfers far exceed that amount. Journalists calculated that in the four months since A7A5’s launch, it has processed transactions worth $9.3 billion.

The primary owner of A7, the company behind A7A5, is Moldovan businessman Ilan Shor. In 2019, he was convicted in Moldova for embezzling $1 billion but fled house arrest and resurfaced in Russia, where he was granted citizenship. The project also involves PSB Bank (formerly Promsvyazbank), which serves the Russian defence sector. The stablecoin is backed by deposits held within it. According to Bloomberg, PSB also holds a stake in the issuing company. A7A5 is traded on Grinex, a Kyrgyz-registered exchange that may be the successor to the Russian crypto exchange Garantex, which was shut down by US and UK sanctions.

A7 CEO Nikolai Shumakov told the Financial Times that the purpose of A7A5 is to 'give people a way to use the stablecoin as a bridge to safely transition into the USDT (Tether) stablecoin.' According to him, most A7A5 holders are likely to be Russian importers. An investigation by The Wall Street Journal found that Garantex was widely used by individuals and firms supplying Russia with dual-use goods. However, a report by the UK’s Centre for Information Resilience (CIR) on A7 and A7A5 suggests the project may serve another purpose. Ruble deposits in PSB backing A7A5 reportedly yield high interest rates: the exact figure is unknown, but it clearly exceeds the returns available on deposits in, for instance, the EU. This means buyers of A7A5 may include both Russians and foreign investors looking for higher returns on their capital.

According to a report by Dmitry Nekrasov, co-founder of the European Centre for Analysis and Strategies (CASE), based on a survey of exporters and importers, settlements in cryptocurrency are the cheapest option. Companies using them consider themselves the least affected by sanctions. 'Grey' importers are one of the few groups for whom the economic situation since the beginning of the war has clearly improved: both revenues and turnover have increased.

At the same time, the most likely direction for the development of international settlements under sanctions is an increased share of the ruble, Nekrasov suggests. Primarily through VTB branches already operating in China, India, and other key partner countries. A new branch is also planned in Iran. Around this 'ruble core,' Nekrasov predicts, auxiliary 'mirrors' will emerge – in yuan, dirhams, lira, and cryptocurrencies. However, their role will remain limited: these schemes are under constant threat of sanctions, and while some may vanish, others will inevitably emerge.

One way or another, Russian crypto practices are being shaped by two opposing forces: the Central Bank’s restrictive stance and the acute need to liberalise crypto trade in order to bypass sanctions. This inevitably creates a regulatory loophole, which will be used not only for the publicly stated 'noble' purposes.