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Russia and China circumvent US financial systems; conduct trades using cryptocurrencies | CryptoTvplus
Russian commodity companies are increasingly using cryptocurrencies to conduct transactions with their Chinese customers and suppliers due to the many challenges and restrictions of traditional financial systems. According to Bloomberg relationshipExecutives at two major unsanctioned metals producers in Russia have confirmed their use of stablecoins for transactions.
Bloomberg noted that some transactions are routed through Hong Kong, offering a solution to the challenges Russian companies face in receiving payments for their goods and acquiring equipment and raw materials.
Stablecoins are a type of cryptocurrency designed to maintain a stable value against a reference asset, such as the US dollar or gold. This makes them more suitable for everyday transactions and payments, unlike other cryptocurrencies such as Bitcoin and Ethereum.
The Russian-Ukrainian war led to the imposition of sanctions against Russian companies and individuals by various countries, including the United States, the European Union, and the United Kingdom. These sanctions aim to hinder Russia’s military and industrial capabilities, as well as its ability to support its war efforts in Ukraine.
On May 2, 2024, the United States imposed new sanctions on more than 280 entities and individuals linked to Russia’s war in Ukraine. The targeted entities include 20 Chinese companies, two of which are accused of exporting drone components and supplying parts for Russian missile systems.
The European Union has sanctioned more than 1,900 individuals and entities, including the Russian leadership, high-ranking officials, military personnel, prominent businessmen and oligarchs.
The sanctions include a complete ban on the participation of Russian citizens and entities in procurement contracts in the EU, restrictions on financial and non-financial support to state-owned or controlled Russian entities, and the suspension of the transmission and distribution of state and professional assets . -Kremlin disinformation outlets.
The UK also took action against Russia, imposing sanctions on six prison chiefs linked to Navalny’s detention and freezing their assets. Additionally, new restrictions were imposed on Russian exports of metals, diamonds and energy.
The sanctions have had significant economic impacts on Russian companies. Many large international companies, such as McDonald’s, Coca-Cola, Starbucks and Heineken, have stopped selling and producing goods in Russia.
However, some companies, such as PepsiCo and Avon, continue to operate there. The sanctions also led to asset freezes and exclusion from financial services such as Swift, which further limited Russia’s financial resources.
Despite sanctions, Russia has managed to find ways to maintain its economic activities. President Vladimir Putin said the sanctions had not had a significant impact on Russia and that the country had managed to sell oil abroad for more than the G7 price cap.
Russia has also increased supplies to countries such as India and China and has been able to import sanctioned Western goods through countries such as Georgia, Belarus and Kazakhstan.
Alternative options for Russian businesses, such as slower transactions or the risk of frozen foreign bank accounts, make stablecoins an attractive choice.