According to Bloomberg, Russian commodities companies that have been blocked in financial transactions with their Chinese counterparts have begun to use cryptocurrencies, including stablecoins, for new settlement methods.

At least two leading metals producers, neither of which is subject to sanctions, have begun using Tether’s stablecoin and a number of other cryptocurrencies to settle some cross-border transactions, primarily with customers and suppliers in China, according to unnamed executives at the companies. It was revealed that in some cases settlement was carried out through Hong Kong.

According to reports, since the Russia-Ukraine conflict began in 2022, Russian companies dealing in commodities ranging from metals such as nickel and steel to commodities such as lumber have faced challenges in collecting payments and purchasing equipment and raw materials, even without sanctions, although some The company has been slapped with multiple penalties by 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 a variety of Russian goods and a supplier of goods and equipment, financial transactions have become more difficult this year, mainly due to threats from the U.S. Treasury Department to impose sanctions on those who help evade sanctions. Lenders impose secondary sanctions, resulting in tightening of compliance measures.

Ivan Kozlov, digital currency expert and co-founder of Resolv Labs, said:

“With stablecoins, transfers may take only 5 to 15 seconds and cost only a few cents, making such transactions quite efficient when the sender already has a stablecoin asset base.”

Tether’s stablecoin USDT is pegged to the U.S. dollar, making the token more convenient for exporters. The alternative typically involves slower transaction times or, worse, the risk that overseas bank accounts may be frozen, executives revealed. One of the people said that some companies not subject to sanctions had opened dozens of accounts in different countries, only to have them frozen one after another.

Kozlov said that in countries facing U.S. dollar liquidity problems and capital controls, cross-border settlement through cryptocurrencies, especially stablecoins pegged to the U.S. dollar, is a relatively common practice, and is not limited to commodity trade. For example, in Venezuela, the country with the largest confirmed oil reserves, an increasing number of goods transactions are being completed through USDT, with many of these transactions (which occur at a significant discount) being facilitated through intermediaries based in Dubai.

At the same time, some commodities companies have adopted another method of settlement of transactions that was once considered alternative. People familiar with the matter said that some steelmakers are using so-called barter transactions, in which commodities are exchanged for goods shipped to Russia, completely avoiding Cross-border transfers.

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