Russian Commodities Firms Embrace Stablecoins For China Trade Amid Sanctions

Russian commodities firms, ranging from base metals to timber, have started using stablecoins like Tether (USDT) to settle cross-border transactions with Chinese customers and suppliers, according to a recent Bloomberg report. This shift comes as the US Treasury Department has imposed multiple rounds of sanctions on Chinese and Russian companies due to various reasons, including the trade war between Washington and Beijing and the ongoing conflict in Ukraine.

The adoption of stablecoins has gained momentum more than two years after Russia invaded Ukraine, highlighting how Moscow has adapted to a changing economic environment where seven Russian banks were banned from the SWIFT messaging system. Even unsanctioned Russian companies have found stablecoins to be a safer alternative to the traditional Western banking system, as they help mitigate the risk of frozen overseas bank accounts.

“With stablecoins, the transfer may take just 5-15 seconds and cost a few cents, making such transactions pretty efficient when the sender already has an asset base in stablecoins,” said Ivan Kozlov, co-founder of Resolve Labs. He added that cross-border settlements through cryptocurrencies and dollar-linked stablecoins are relatively common in countries facing dollar liquidity issues and capital controls, not just in the commodities sector.

The growing adoption of stablecoins in Russia’s global trade reveals that Western sanctions have failed to implode the Russian economy. The Russian Central Bank has even been experimenting with crypto payments for international transactions, and some major Russian banks have started offering services to facilitate crypto settlements for importers.

This trend extends beyond Russia, with Venezuela’s state-run oil company, PDVSA, slowly moving oil sales to USDT after the US recently imposed sanctions on the country. Despite these developments, some central bankers, like Neel Kashkari of the Federal Reserve Bank of Minneapolis, maintain that cryptocurrencies like Bitcoin have “no actual utility in the economy, other than being a nice toy that some people enjoy owning and trading.”