Stablecoins have become an option for Russian commodity enterprises that are having trouble conducting financial operations with their Chinese competitors.
Bloomberg recently reported that, in light of international constraints and stricter compliance requirements, these companies have begun to use cryptocurrencies, such as Tether’s stablecoin, to enable cross-border transactions with their Chinese consumers and suppliers.
Two prominent unsanctioned metals manufacturers have reportedly admitted to using stablecoins for transactions, according to the article.
Russian businesses have a hard time getting their hands on raw supplies and equipment; therefore, they find ways to circumvent this problem by routing certain transactions via Hong Kong.
Russian companies’ use of blockchain and stablecoins shows how the sanctions imposed by the international community in reaction to the crisis in Ukraine are having a long-lasting effect.
Due to the potential of secondary sanctions from the US Treasury Department, financial transactions have grown more complicated even in China, a crucial export market for Russian goods, even though China has not implemented sanctions.
When compared to more conventional methods, stablecoins have benefits including reduced transaction fees and quicker settlement times.
Stablecoins are a good alternative to delayed transactions or the possibility of having foreign bank accounts closed, which are problems for Russian businesses.
In order to avoid having their accounts frozen one by one, several unlicensed businesses opened multiple bank accounts in other countries.
Russian businesses are hardly alone in accepting cryptocurrency payments. Tether has become more popular among sanctioned countries, such as Venezuela, as a means of making transactions, with middlemen in Dubai enabling these purchases at often substantial discounts.
Another indicator of a change in strategy from the Russian central bank is the increasing importance of cryptocurrency settlements. A total prohibition of cryptocurrencies was previously being discussed by the Bank of Russia.
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