Russia and China Turn to Stablecoins Like Tether to Evade Sanctions
The use of stablecoins, such as Tether, is forcing Russia and China to adopt more advanced payment systems, leaving those in Europe and the U.S. behind. This shift is due to the efficiency and speed of stablecoin transactions, which can take mere seconds and have minimal fees. However, this also poses challenges, as it allows Russian smugglers to evade sanctions on weapons and drone parts using Tether.
The Russian Central Bank has endorsed experiments with crypto payments in international transactions, but has limited acceptance to cross-border trade and banned advertising for it. Despite this, Russian commodity companies and their Chinese trading partners are facing difficulties executing bank transfers due to secondary U.S. sanctions. This has led them to turn to stablecoins like Tether, becoming more entangled with the U.S. dollar.
In response to Chinese banks refusing Russian customers to avoid potential U.S. sanctions, two Russian metal producers have started using Tether for transactions. This is not limited to sanctioned companies; even those not under sanctions are turning to stablecoins for efficiency. The BRICS countries, including Russia and China, are exploring this option, potentially modernizing their payment systems. However, the illusion that sanctions still work in the age of cryptocurrencies could prove to be a bitter pill for the West to swallow.
The increasing use of stablecoins like Tether by Russia and China for international transactions is a response to sanctions and the refusal of Chinese banks to deal with Russian customers. While this presents challenges, it also offers an opportunity for these countries to adopt more efficient payment systems. However, it remains to be seen how effective sanctions will be in the face of this technological shift.
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