russia starts using cryptocurrency to trade with China

Russian commodity companies facing difficulties in conducting financial transactions with partners from China have started using cryptocurrencies for payments.

At least two of the largest metal producers that have not been subject to Western sanctions have started using Tether Holdings Ltd's stablecoin and other cryptocurrencies to settle international transactions with predominantly Chinese customers and suppliers. In some cases, payments are made through Hong Kong.

“The fact that large russian firms are turning to blockchain two years after the start of the invasion of Ukraine in February 2022 underscores the long-term impact of international restrictions on the country's economy in response to the war,” Bloomberg writes.

It is noted that russian companies trading in raw materials, from metals, including nickel and steel, to timber, have faced problems in receiving payments for their goods, purchasing equipment and raw materials since the beginning of the invasion of Ukraine. Even in China, which has not joined the international sanctions against russia and has become the main export market for many russian goods, as well as a supplier of goods and equipment, financial transactions have become more difficult this year. This is largely due to warnings from the U.S. Treasury about secondary sanctions.

At the same time, some commodity companies have chosen a different method of payment. For example, some steel producers use so-called barter transactions, where goods are exchanged for goods supplied to russia. In this way, they manage to avoid cross-border transfers entirely.

Source: Bloomberg