Cryptocurrencies

Cryptocurrency Saves the Day in Boosting Russia-China Trading of Commodities

Russia’s Utilization of Cryptocurrency

LUCKNOW (CoinChapter.com) — In response to the economic sanctions imposed by the West on Russia, major Russian commodity exporters are turning to cryptocurrency to maintain trade relationships with their key partner China. According to company executives, several prominent metals and mining firms have begun using stablecoins like Tether (USDT) to facilitate cross-border transactions.

Source: X

Executives stated that at least two of Russia’s largest unsanctioned metals producers have embraced Tether and other cryptocurrencies to settle transactions with Chinese partners. Some of these crypto transactions are processed through intermediaries in Hong Kong.

Reviving Frozen Russia-China Commerce with Stablecoins

Stablecoins offer quick transfers, taking only 5-15 seconds, and are cost-effective, making transactions efficient, as highlighted by Ivan Kozlov, a crypto expert at Resolv Labs. Tether’s USDT stablecoin, which is pegged to the U.S. dollar, is particularly beneficial for exporters.

Previously, Russian firms faced challenges with slow bank transactions and frozen overseas accounts, even if they were not under sanctions. This issue prompted some companies to open numerous accounts across multiple countries, only to have them frozen one by one.

Despite not joining Western sanctions, China has faced increased financial difficulties this year due to U.S. pressure on banks for enforcement. This has significantly impacted Russian commodity flows to China, including metals, timber, and other goods.

The use of cryptocurrency has become a common workaround for countries facing international sanctions. For instance, Venezuelan oil sales to China and other countries are increasingly being settled in Tether through brokers based in Dubai.

Is Russia Embracing Cryptocurrency?

Russia’s recent adoption of cryptocurrency for international trade marks a significant shift, as the central bank had previously contemplated a ban. Governor Elvira Nabiullina now supports “experimenting” with cryptocurrency for cross-border payments, while warning banks against promoting it.

Legislators are currently drafting laws to establish a legal framework allowing the use of stablecoins for international settlements. The central bank has observed a notable increase in crypto activity among Russians.

Furthermore, crypto-related banking services are expanding rapidly in Russia. Rosbank, owned by billionaire Vladimir Potanin of Norilsk Nickel, was the first to offer crypto cross-border payments for businesses in June 2023. Several other Russian banks have since followed suit.

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