According to Bloomberg, Russian commodity companies that have encountered obstacles in conducting financial transactions with their Chinese counterparts have started using cryptocurrencies, including stablecoins, for new settlement methods.
At least two leading metal producers (not subject to sanctions) have begun using Tether’s stablecoin and other cryptocurrencies to settle some cross-border transactions, mainly with Chinese customers and suppliers. According to unnamed executives from these companies, settlements are sometimes conducted through Hong Kong.
Since the start of the Russia-Ukraine conflict in 2022, Russian companies engaged in the trade of commodities such as nickel and steel, as well as timber, have faced challenges in collecting payments, purchasing equipment, and obtaining raw materials. This is the case even for companies that have not been sanctioned, although some have already faced multiple penalties from the United States, the European Union, and their allies.
Even in China, which has not joined international sanctions and has become a major export market for various Russian commodities, as well as a supplier of goods and equipment, financial transactions this year have become increasingly difficult. This is mainly due to the US Treasury’s threat to impose secondary sanctions on lenders assisting in the evasion of sanctions, leading to tighter compliance measures.
Ivan Kozlov, co-founder of Resolv Labs and a digital currency expert, stated that Tether’s stablecoin USDT, which is pegged to the US dollar, makes it more convenient for exporters. Executives revealed that other options often have slower transaction speeds or, worse, face the risk of overseas bank accounts being frozen. One individual stated that some unsanctioned companies have opened dozens of accounts in different countries, only to have them frozen one after another.
Kozlov also stated that in countries facing US dollar liquidity issues and capital controls, using cryptocurrencies, especially stablecoins pegged to the US dollar, for cross-border settlements is a common practice, not limited to commodity trade. For example, in Venezuela, which has confirmed the largest oil reserves, an increasing number of goods transactions are being completed through USDT, with many transactions facilitated by intermediaries based in Dubai, often at significant discounts.
Meanwhile, some commodity companies have adopted another alternative settlement method that was once considered unconventional. Insiders revealed that some steel manufacturers are using barter trade, which involves exchanging commodities for goods shipped to Russia, completely avoiding cross-border transfers.
Source:
Bloomberg
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