Russian companies are switching to cryptocurrencies in global trade despite sanctions

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The Russian raw materials company has more and more turned to cryptocurrency to bypass financial obstacles resulting from international sanctions.

Amid challenges facing established banking channels, companies are now turning to stablecoins, particularly Tether (USDT), to facilitate “seamless and fast cross-border transactions” with their Chinese counterparts, according to Bloomberg.

Major Russian metals producers have embraced this transition primarily as they look for effective alternatives to conventional financial systems to sustain their commercial activities.

How stablecoins are changing international trade financing

These changes respond to the expanded economic consequences of international sanctions following the geopolitical tensions that began in early 2022.

According to Bloomberg, although these companies are not directly targeted by sanctions, they have faced significant obstacles in conducting international business, in particular in receiving payments and obtaining necessary materials and equipment.

In particular, the adoption of stablecoins appears to be a strategic move to maintain business continuity and mitigate the risks associated with frozen bank accounts and the sluggish pace of established banking transactions.

As revealed, the appeal of using stablecoins like Tether’s USDT lies in their ability to facilitate transactions quickly and cheaply. Ivan Kozlov, digital currency expert and co-founder of Resolv Labs, explained:

For stablecoins, the transfer can take as little as 5-15 seconds and cost a few cents, which makes such transactions quite effective when the sender already has an asset base in stablecoins.

Additionally, Kozlov revealed that the exploit of cryptocurrencies in trade finance is gaining popularity among unsanctioned companies and as a broader practice in countries facing financial constraints or “dollar liquidity problems.”

This highlights the growing recognition of cryptocurrency’s potential to serve as a “reliable” medium for significant international transactions, particularly in environments where established financial systems pose significant operational challenges.

Russia’s current position on cryptocurrencies

Meanwhile, the inclusion of cryptocurrencies in Russia’s trade mechanisms also means a change in the country’s regulatory stance towards digital assets.

Bloomberg noted that the initially skeptical Russian central bank has changed its mind, recognizing the potential benefits of cryptocurrencies in bypassing financial barriers.

The report reads:

Previously, the Bank of Russia was considering introducing a complete ban on the exploit and creation of all cryptocurrencies, but in November, Governor Elvira Nabiullina told parliament that she supported experimenting with such payments in international transactions.

These changes included strategic advisors such as Gabor Gurbacs of Tether and VanEck recommended for broader adoption of cryptocurrencies like Bitcoin by central banks, especially for countries experiencing fiat currency devaluation.

Gurbaki indicates that adding Bitcoin to national reserves could ensure economic stability and diversification, proposing that countries start allocating a tiny percentage to cryptocurrencies and gradually boost their holdings.

BTC price is moving up on the 4-hour chart. Source: BTC/USDT incl

Featured image created with DALL·E, chart from TradingView


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