Russian & Chinese Businesses Turn to Stablecoins Like Tether for Sanction-Proof Transactions
Russian and Chinese businesses are turning to stablecoins like Tether (USDT) for international transactions, drawn by their speed, low cost, and resistance to sanctions. This shift comes as traditional banking methods face obstacles due to sanctions and geopolitical tensions.
Chinese banks have been refusing Russian customers to steer clear of potential U.S. sanctions. This has pushed businesses to seek alternative payment methods. Stablecoins, which offer quick and low-cost transfers, have emerged as an attractive option. They are not only sanction-proof but also more efficient than traditional banking methods.
The Russian Central Bank has shown support for using cryptocurrencies, including USDT, in international transactions, albeit with certain limitations. While there's no concrete evidence of Chinese traders using USDT in trades with Russian raw materials companies, Russia has been actively employing cryptocurrencies to bypass sanctions, particularly in dealings with China and India.
The effectiveness of sanctions is driving more companies to adopt stablecoins. Two Russian metal producers have started using USDT for transactions, even when not directly targeted by sanctions. Russian commodity companies and their Chinese trading partners are facing difficulties executing bank transfers due to secondary U.S. sanctions, pushing them towards stablecoins. Even Russian smugglers are increasingly using USDT to evade sanctions on weapons and drone parts.
While stablecoins offer a solution to sanctions-related payment issues, they do not help BRICS nations break away from the U.S. dollar. Instead, they are becoming more entangled with it, as USDT is pegged to the dollar. Despite this, businesses are increasingly settling payments using USDT to circumvent banking obstacles.
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