Avoiding Sanctions, Companies in Russia Use Crypto for Cross-Border Transactions

Previously, Russian commodity companies that had difficulty making financial transactions with China had used a new method to complete deals, namely using stablecoins.

Quoting Yahoo Finance, Tuesday (28/5/2024), at least two leading metal producers, both of which are unlicensed, have started using tether holdings Ltd stablecoins and several other cryptocurrencies to complete some cross-border transactions with mostly Chinese clients and suppliers.

In some cases, transaction settlement is via Hong Kong. This was conveyed by a number of company leaders but refused to be named.

The fact that major Russian companies are now turning to blockchain, two years after the start of the invasion of Ukraine in February emphasizes the long-term economic impact of international restrictions in response to the war.

Russian companies operating in commodities ranging from metals, namely nickel, steel to wood, have faced challenges in receiving payment for goods and purchasing equipment and raw materials since the start of the conflict.

This applies even when they are not subject to sanctions, although some of them have received heavy penalties from the United States (US), the European Union and their allies.

Even in China, which does not comply with international sanctions and has become a major export market for various Russian commodities as well as a supplier of goods and equipment, financial transactions will become increasingly difficult in 2024.

This was largely due to the US Treasury Department threatening sanctions against lenders that facilitate sanctions evasion leading to a tightening of compliance measures.

“With stablecoins, a transfer may only take 5-15 seconds and cost a few cents, making the transaction quite efficient when the sender already has an asset base in the stablecoin,” said Resolv Labs co-founder Ivan Kozlov.