Some Russian companies have turned to using crypto to settle payments and protect themselves from potential secondary sanctions from Western countries. At least two top metal producers have transacted using USDT, the largest stablecoin in the crypto market, as the G7 and the EU mull more sanctions against alternatives for these operations.
Companies Turn to Crypto for Payments as G7 and EU Mull Sanctions on Russian SWIFT Equivalent
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Crypto Used as Alternative Payment Channel as G7 and EU Consider Sanctions on Russian SWIFT Alternative
Some Russian companies are turning to crypto for cross-border settlements to avoid the complications of being targeted by secondary sanctions by the Group of Seven (G7) and the European Union (EU). According to Bloomberg, two top Russian metal producers have leveraged USDT, the largest U.S. dollar-pegged stablecoin, to pay and receive payments from Chinese customers and suppliers.
These companies have also turned to other alternatives, such as using small and regional banks as intermediaries to process these transactions; however, these have become more scrupulous as they seek to avoid these sanctions.
Crypto presents several advantages for this use case, as the transactions are not subject to sanctions and do not have to use intermediaries. Ivan Kozlov, an expert on digital currencies and co-founder at Resolv Labs, stated:
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.
The use of stablecoins might grow more in time, as the Western world is mulling sanctions to keep isolating the Russian economy from its closer partners. The G7 and the EU seek to target financial institutions using the Bank of Russia’s Financial Messaging System (SPFS), implemented as a Russian alternative to SWIFT, the de facto standard for cross-border transactions.
TASS reports that the upcoming set of sanctions would ban the use of SPFS for EU member states. Nonetheless, some countries have reportedly pushed back, arguing that these measures, if taken, “could impact legitimate transactions and harm relations with third countries.”
What do you think about Russian companies harnessing crypto to avoid secondary sanctions? Tell us in the comments section below.
