- Russian metal producers have primarily adopted blockchain-based alternatives to conventional payment systems to maintain their trading operations
- Previously, the Bank of Russia had considered a complete ban on all cryptocurrencies, but in November, Russian central bank governor Elvira Nabiullina said she supports experimenting with such payments in international transactions
Russian commodity firms have increasingly turned to cryptocurrency to circumvent financial hurdles posed by international sanctions.
With traditional banking channels facing challenges, companies are now leveraging stablecoins, notably Tether (USDT), to facilitate “seamless and swift cross-border transactions” with their Chinese counterparts, as reported by Bloomberg.
Major Russian metal producers have primarily adopted this transition, seeking efficient alternatives to conventional financial systems to maintain their trading operations.
How Stablecoins Are Transforming International Trade Finance
These developments respond to the extended economic ramifications of international sanctions following geopolitical tensions that began in early 2022.
According to Bloomberg, despite not being directly targeted by sanctions, these firms have encountered substantial obstacles in conducting business internationally, particularly in receiving payments and acquiring necessary materials and equipment.
Notably, adopting stablecoins appears to be a strategic move to preserve business continuity and mitigate the risks associated with frozen bank accounts and the slow pace of traditional banking transactions.
As disclosed, the appeal of using stablecoins like Tether’s USDT lies in their ability to facilitate transactions quickly and cheaply. Ivan Kozlov, a digital currency expert and co-founder at Resolv Labs, explained:
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.
Furthermore, Kozlov revealed that the use of cryptocurrencies in trade finance is gaining traction among unsanctioned firms and as a broader practice in countries facing financial restrictions or dollar “liquidity issues.”
This highlights a growing recognition of cryptocurrency’s potential to serve as a “reliable” medium for substantial international transactions, especially in environments where traditional financial systems pose considerable operational challenges.
Russia’s Current Crypto Stance
Meanwhile, integrating cryptocurrencies into Russia’s trade mechanisms also signifies a change in the country’s regulatory stance towards digital assets.
Bloomberg noted that initially skeptical, the Russian central bank has shifted its view, recognizing the potential benefits of cryptocurrencies in circumventing financial barriers.
The report read:
Previously, the Bank of Russia had considered a blanket ban on the use and creation of all cryptocurrencies, but in November, Governor Elvira Nabiullina told parliament that she supports experimenting with such payments in international transactions.
Amidst these developments, strategic advisors like Gabor Gurbacs from Tether and VanEck have advocated for the broader adoption of cryptocurrencies like Bitcoin by central banks, especially for those countries experiencing fiat currency devaluation.
Gurbacs suggests that adding Bitcoin to national reserves could provide economic stability and diversification, proposing that countries start allocating a small percentage to cryptocurrencies and gradually increasing their holdings.
Once more reinforcing that the primary use case for crypto is doing shady and/or illegal shit.
Yes, but also allows others to have less control over your transactions. I don’t have any crypto as I think its justbanpyramid scheme at the moment, but the concept is sound. The criminals and negative elements is by necessity for them.
The second that people started using centralized crypto exchanges this argument went out the window. A third party has just as much control, with zero oversight isn’t that neat?
Yes, but even having multiple options for exchanges, even if centralised means less control by government or others.
They are only a real alternative is when we can use cryoto for cheap real time payments for general items like a credit card.
What the fuck are you talking about? It doesn’t matter how many options you have for an exchange, as soon as you choose one you give the keys to the castle to another person. You have no idea who they are, if you should trust them, or what your recourse would be if they scammed you. But don’t worry the scary government won’t be involved at all. What a joke.
Oh man wait until you hear about cash! (Which is still number 1 for crime btw, you want to ban cash too?)
This is a myth. It’s just a good way to transfer money fast and at very low cost. If you want to do illegal stuff and/or try to hide your money trail, you wouldn’t use a public ledger.