Key Takeaways:
- Russian commodity firms using crypto to bypass sanctions, settle China trades
- Stablecoins like Tether's USDT enabling fast, cheap cross-border payments for exports
- Russia embracing crypto, mulling legal framework as financial restrictions persist
LUCKNOW (CoinChapter.com) — Due to Western sanctions on Russia’s economy, major Russian commodity exporters have started using cryptocurrency to keep trade flowing with key partner China. Several top metals and mining firms have begun utilizing stablecoins like Tether (USDT) to settle cross-border deals, according to company executives.
At least two of Russia’s largest unsanctioned metals producers have adopted Tether and other cryptocurrencies to settle some transactions with Chinese partners, the executives said. In certain cases, these crypto settlements go through Hong Kong middlemen.
How Stablecoins is Reviving Frozen Russia-China Commerce
With stablecoins, the transfer may take just 5-15 seconds and cost a few cents, making such transactions pretty efficient.
said Ivan Kozlov, a crypto expert at Resolv Labs.
Tether’s USDT stablecoin, pegged to the U.S. dollar, is especially convenient for exporters.
The alternative has often been agonizingly slow bank transactions or frozen overseas accounts – a frequent issue even for unsanctioned firms. Some opened dozens of accounts across multiple nations, only to see them frozen one by one.
While China didn’t join Western sanctions, financial dealings have grown harder this year due to U.S. pressure on banks over enforcement. This has severely impacted major Russian commodity flows to China, including metals, timber and more.
Using crypto is an increasingly common workaround for nations under sanctions. Venezuelan oil sales to China and elsewhere have increasingly been settled in Tether through Dubai-based brokers.
Is Russia Finally Embracing Cryptocurrency?
Russia’s embrace of crypto for international trade represents an about-face for the central bank, which had previously considered an outright ban. But Governor Elvira Nabiullina now supports “experimenting” with cryptocurrency for cross-border payments, though reminding banks not to advertise it.
Lawmakers are also drafting legislation to create a legal framework allowing the use of stablecoins for international settlements. The central bank recently noted a “significant” rise in crypto activity by Russians.
Meanwhile, crypto-linked banking services are rapidly expanding in Russia. Rosbank, owned by billionaire Vladimir Potanin of miner Norilsk Nickel, was the first to offer crypto cross-border payments for businesses in June 2023. Multiple other Russian lenders have followed suit.
