Russian commodity exporters are turning to cryptocurrency, specifically stablecoins like Tether’s USDT, to bypass Western sanctions and maintain trade with China. This move comes as major metals and mining firms in Russia have started using cryptocurrencies to settle cross-border transactions with Chinese partners. In some cases, these settlements are facilitated through Hong Kong middlemen. The use of stablecoins, which are pegged to the US dollar, offers a convenient alternative to slow bank transactions and frozen overseas accounts, which have been a recurring issue for unsanctioned firms. While China has not joined Western sanctions, financial dealings have become more challenging due to US pressure on banks. This has significantly impacted Russian commodity flows to China. Notably, the use of cryptocurrency for international trade represents a change of stance for the Russian central bank, which had previously considered banning it altogether. Governor Elvira Nabiullina now supports experimenting with cryptocurrency for cross-border payments, although banks are advised not to promote it. Lawmakers are also in the process of drafting legislation to establish a legal framework for the use of stablecoins in international settlements. The central bank has observed a significant increase in crypto activity among Russians. Additionally, there has been a rapid expansion of crypto-related banking services in Russia, with Rosbank becoming the first to offer crypto cross-border payments for businesses in June 2023. Other Russian lenders have since followed suit.
