JAKARTA - Russian commodity companies face major challenges in carrying out financial transactions with their Chinese counterparts. Due to international restrictions and tightening compliance measures, these companies turned to cryptocurrencies, including stablecoins like Tether, to facilitate cross-border transactions. According to a recent report from Bloomberg, executives of two large metal producers who were not sanctioned have confirmed the use of stablecoins for their transactions.
Several transaction settlements were made through Hong Kong, providing solutions for Russian companies that had difficulty accepting payments for their goods and buying equipment and raw materials.
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Russian Companies Use Stablecoins Amid Sanctions
The adoption of blockchain technology and stablecoins by Russian companies demonstrates the ongoing impact of international restrictions imposed in response to the conflict in Ukraine. Even in China, which does not impose sanctions and has become a major export market for Russian commodities, financial transactions have become more challenging due to the threat of secondary sanctions from the US Treasury Department.
Stablecoin offers profits such as faster transactions and lower costs than traditional methods. Quoted from CryptoNews, With stablecoins, transfers can take just 5-15 seconds and cost just a few cents, making such transactions very efficient when the sender already has an asset base in stablecoins, said Ivan Kozlov, a digital currency expert and co-founder of Resolv Labs.
Alternative options for Russian companies, such as slower transactions or risk of frozen foreign bank accounts, have made stablecoins an attractive option. Some companies that are not subject to sanctions are forced to open many bank accounts in various countries, but often these accounts are frozen one by one.
Other Countries Under Sanctions Also Switch To Stablecoins
The use of cryptocurrencies for payments is not only made by Russian companies. Countries that are under sanctions, such as Venezuela, are increasingly using Tether to make transactions, often with large discounts, with Dubai-based intermediaries facilitating these transactions.
The increase in the role of crypto assets in transaction settlements also shows a change in approach from Russia's central bank. Previously, the Central Bank of Russia considered a total ban on all crypto assets. However, Governor Elvira Nabiullina expressed support for experimenting with crypto payments in international transactions.
The central bank has warned lenders that crypto payments may only be used for cross-border transfers and should not be advertised. They are also considering legislation to establish a legal framework for the use of stablecoins in international transactions.
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