According to reports, Russian companies in the commodities sector are utilizing the popular stablecoin USDT for financial transactions with Chinese firms. Bloomberg, citing high-ranking executives, states that at least two metals producers in Russia are using Tether’s stablecoin and other cryptocurrencies to facilitate cross-border transactions with their clients and suppliers in China. These companies, which have not been sanctioned, reportedly occasionally route settlements through Hong Kong as well.

Although China did not impose sanctions on Russian companies following Russia’s invasion of Ukraine in 2022, Chinese lenders have reportedly tightened their compliance measures due to the potential for secondary sanctions when working with Russian firms.

USDT, with the highest market capitalization among stablecoins, aims to maintain a 1:1 peg to the US dollar.

Ivan Kozlov, co-founder of crypto firm Resolv Labs, explains to Bloomberg that dollar-pegged stablecoin cross-border transactions are a “relatively common practice” in countries facing dollar liquidity issues and capital controls. He adds that with stablecoins, the transfer can be completed in just 5-15 seconds and cost only a few cents, making such transactions highly efficient for senders who already possess stablecoin assets.

Bloomberg also reports that some Russian steelmakers are opting to send their products abroad in exchange for goods shipped into Russia, thus avoiding cross-border transactions altogether.

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