Russia, China Explore Stablecoins to Circumvent Sanctions
Despite the growing use of stablecoins like Tether (USDT) for cross-border payments, BRICS countries such as Russia and China remain heavily reliant on the US dollar. However, recent developments suggest that these countries are exploring stablecoins as an alternative to circumvent sanctions and banking transfer issues.
Russian mathematician Ivan Kotzov has confirmed the widespread use of stablecoins in countries facing dollar liquidity problems or capital controls. This is particularly relevant for Russia, which has been grappling with sanctions since 2014. Stablecoins offer a sanction-free, low-fee, and quick alternative for cross-border payments.
In a surprising turn of events, Russian smugglers have been caught using Tether to circumvent sanctions on weapons and drone parts. Meanwhile, the Russian central bank has been supportive of stablecoin experiments in international payments, albeit with certain limitations.
Russian and Chinese companies are increasingly turning to Tether for payments due to banking transfer issues. Secondary US sanctions have been causing Chinese banks to reject Russian customers en masse, leading two Russian metal producers, not subject to sanctions, to start using Tether for deliveries to China and imports.
However, it's important to note that there are no specific Russian companies identified as using Tether to bypass sanctions in their trade relationships with China. The use of stablecoins appears to be a response to broader sanctions and financial restrictions hindering raw material trade between the two countries.
While the US dollar remains dominant, stablecoins like Tether are emerging as a viable alternative for cross-border payments, particularly for countries like Russia and China facing banking transfer issues and sanctions. As secondary sanctions continue to cause pain for Russian companies, the use of stablecoins is likely to increase, although it's unclear how widespread this practice will become.
