Russian companies are turning to cryptocurrency for transactions with Chinese partners amid ongoing sanctions.
According to recent Bloomberg report, at least two major metal producers are using Tether’s USDT stablecoin to settle cross-border deals.
Russian Companies Turn to Stablecoins
Since February 2022, Russian businesses have faced significant payment difficulties due to sanctions and compliance measures. This has impacted both sanctioned companies and those not directly targeted. Commodities firms have found stablecoins to be a practical solution for cross-border transactions, overcoming issues with receiving payments and procuring equipment.
Over the past two years, China has emerged as the primary export market for Russian goods. However, financial transactions routed through Hong Kong have become challenging due to the US Treasury Department threatening secondary sanctions against entities that facilitate the evasion of existing restrictions.
To navigate these complexities, both countries are increasingly using USDT. This approach mitigates the risk of frozen overseas bank accounts, a recurring problem, despite opening multiple accounts in various locations. This practice, however, is not new; Venezuela, for instance, frequently uses Tether for oil transactions, acknowledging the growing acceptance of stablecoins in global trade.
Read more: Crypto Regulation: What Are the Benefits and Drawbacks?
The Russian Central Bank has long opposed cryptoassets. However, external circumstances are gradually forcing the regulator to reconsider its stance. Russian lawmakers are considering legislation to create a legal framework for stablecoin use in international transactions, signaling formal recognition of cryptocurrencies’ utility in bypassing traditional financial barriers.
Tether’s stablecoin, tied to the US dollar, frequently faces allegations of involvement in black-market trades. The company denies the allegations, highlighting its cooperation with law enforcement and the traceability of its token.
Read more: 8 Best Crypto Wallets to Store Tether (USDT)
As Russia and China navigate the complexities of international sanctions, stablecoins offer a promising solution for maintaining trade and financial stability. This shift highlights the resilience of cryptocurrencies and their growing importance in global trade dynamics.
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