Russia is building a parallel financial infrastructure centred on cryptocurrency to sustain trade flows and bypass western sanctions, with state-backed platforms converting rubles into digital assets that can be settled outside the traditional banking system.

“Russia is building a parallel financial system to survive sanctions, and crypto is at its core,” according to Kyrylo Shevchenko, the former governor of the National Bank of Ukraine (NBU).

The system allows rubles to be converted into crypto and then into dollar-pegged stablecoins such as USDT, enabling payments that avoid western correspondent banks.

The Central Bank of Russia (CBR) has developed a digital ruble which was tested in the summer of 2025 and will be launched sometime in 2026. Much of the legislation needed to regulate virtual currencies has also been enacted in the last year. And as bne IntelliNews reported, the Institute for Economic Strategies of the Russian Academy of Sciences (IRIAS)has launched a working prototype of a gold-backed cryptocurrency for settling trade deals in December 2025 known as the “Unit” that is designed to eventually replace the dollar in global trade.

However, the roll out of virtual payment settlements has already been rolled out. Since January, a ruble-backed digital token used within this system has processed “tens of billions” of dollars’ worth of transactions, largely linked to trade with Asia, according to Shevchenko. Activity patterns suggest the flows are commercial rather than retail-driven.

“This isn’t retail crypto hype — volumes peak on weekdays,” Shevchenko notes, “pointing to business and military supply chains (chips, electronics, components).”

Western governments have focused sanctions on limiting how Russia earns foreign currency, particularly through restrictions on oil and gas exports. But analysts say crypto-based payment rails address a different vulnerability. “Oil sanctions target how Russia earns money. Crypto targets how it spends it,” Shevchenko said.

Russian officials have openly discussed using digital assets for cross-border settlements since 2022, when major banks were cut off from the SWIFT messaging system. In 2024, Russia passed legislation allowing companies to use cryptocurrencies in international trade under an experimental legal regime. The central bank has said domestic crypto payments remain banned, but cross-border use is permitted. And at the BRICS summit in Kazakh last year Russian President Vladimir Putin showcased the BRICS Pay coin – a digital currency based on a combination of the digital versions of the ruble, rupee and yuan among others, that could be used in trade deals. Analysts say the BRICS Pay system will not be ready until 2028, and is still in development, with the option of adding gold to the basket also being considered.

Stablecoins such as USDT, which are pegged to the US dollar and widely used in emerging markets, are seen as particularly attractive because they offer price stability and deep liquidity. According to blockchain analytics firms, stablecoin volumes linked to Russia have risen sharply since late 2023, even as overall crypto markets fluctuated.

Western regulators have warned that enforcement is struggling to keep pace. The US Treasury’s Office of Foreign Assets Control (OFAC) has sanctioned several crypto wallets and exchanges accused of facilitating Russian trade, but officials privately acknowledge that decentralised payment networks are harder to police than traditional banks.

As Russia deepens economic ties with China, the Middle East and parts of south-east Asia, analysts expect crypto-based settlement mechanisms to play a growing role. One senior European official said privately that the sanctions policy now faced a structural challenge: “We built our system to control banks. They are building one designed to work without them.”