Russian Firms Embrace Crypto for China Trade
The shift towards blockchain-based transactions highlights the enduring impact of international restrictions imposed in response to the 2022 invasion of Ukraine on the Russian economy. Even unsanctioned Russian companies dealing in commodities such as metals and timber have encountered difficulties in receiving payments for their goods and procuring equipment and raw materials. Challenges persist despite China’s stance of not joining international sanctions, as the US Treasury Department’s threats of secondary sanctions on lenders facilitating sanctions evasion have led to increased compliance measures.
Stablecoins offer a faster and more cost-effective alternative for transactions, with transfers taking just seconds and costing only a few cents. Tether’s USDT stablecoin, pegged to the US dollar, provides added convenience for exporters. The alternative of traditional banking transactions carries the risk of account freezing, with some companies experiencing the frustration of multiple frozen accounts in various countries.
The growing role of cryptocurrencies in settlements is not unique to Russia, as countries under sanctions like Venezuela have increasingly turned to Tether for transactions, often brokered through intermediaries in Dubai. This trend reflects a broader shift in the Russian central bank’s stance towards the cryptocurrency industry. While previously considering a blanket ban, Governor Elvira Nabiullina now supports experimenting with cryptocurrency payments in international transactions.
However, the central bank has emphasized that cryptocurrency payments are acceptable only for cross-border transfers and should not be promoted domestically. Legislation is being considered to establish a legal framework for stablecoin use in international transactions.
Meanwhile, cryptocurrency-linked banking services in Russia are expanding, with Rosbank becoming the first Russian lender to initiate cross-border payments with cryptocurrency for businesses in June last year. Other banks have followed suit since then.
In contrast to stablecoin adoption, some commodities firms are opting for barter deals to settle transactions, entirely avoiding cross-border transfers. This approach, once considered exotic, involves swapping commodities for goods shipped to Russia.
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