As international sanctions continue to impact Russia’s global trade, Russian commodities firms are increasingly turning to stablecoins like Tether (USDT) to facilitate cross-border transactions with their Chinese counterparts.
This shift towards cryptocurrencies is driven by the challenges posed by traditional banking channels, which have become more difficult to navigate due to the threat of secondary sanctions from the US Treasury Department.
TLDR
- Russian commodities firms, particularly in metals and timber, are increasingly using stablecoins like Tether (USDT) to settle cross-border transactions with Chinese companies.
- Stablecoins help Russian companies avoid issues with frozen overseas bank accounts and facilitate swift, cost-effective transfers amid sanctions and tighter compliance measures.
- The use of stablecoins reflects a broader shift in Russia’s regulatory landscape, with the central bank now open to experimenting with crypto payments for international transactions.
- Russian lawmakers are considering legislation to create a legal framework for stablecoin use in international transactions, indicating a formal recognition of cryptocurrencies’ utility in bypassing financial barriers.
- The growing adoption of stablecoins in global trade is not unique to Russia, with countries like Venezuela also turning to Tether for conducting transactions under sanctions.
According to a recent report from Bloomberg, top executives from two major unsanctioned Russian metals producers have confirmed their use of stablecoins for transactions with Chinese clients and suppliers.
Some settlements are conducted through Hong Kong, providing a workaround for the difficulties faced by Russian firms in receiving payments for their goods and purchasing equipment and raw materials.
The appeal of stablecoins lies in their ability to facilitate swift and cost-effective transfers. Ivan Kozlov, an expert on digital currencies and co-founder at Resolv Labs, explained that stablecoin transfers can take just 5-15 seconds and cost a few cents, making them a highly efficient alternative when the sender already has an asset base in stablecoins.
The use of stablecoins helps mitigate the risk of frozen overseas bank accounts, a problem that has plagued unsanctioned Russian companies.
Despite opening numerous bank accounts in different countries, many have faced repeated freezes, making stablecoins an attractive option for maintaining business continuity.
The growing adoption of stablecoins in Russia’s global trade reflects a broader shift in the country’s regulatory landscape.
The Russian central bank, which once considered banning all cryptocurrencies, is now open to experimenting with crypto payments for international transactions. In November, Governor Elvira Nabiullina expressed support for such trials, marking a significant policy change.
Russian lawmakers are also considering legislation to create a legal framework for stablecoin use in international transactions, indicating a formal recognition of cryptocurrencies’ utility in bypassing financial barriers
. The central bank has noted a significant rise in cryptocurrency activity among Russians, signaling a broader acceptance and integration of digital currencies in the economy.
In response to the increasing demand, Russian banks are expanding their crypto-linked services. Rosbank, for instance, started cross-border payments with cryptocurrency for businesses in June last year, with other banks following suit.
The use of stablecoins in global trade is not unique to Russia. Countries under sanctions, like Venezuela, have also turned to Tether for conducting transactions, often at significant discounts, with intermediaries based in Dubai facilitating these deals.
