Russia’s two largest unsanctioned metal producers have reportedly started using Tether’s USDT stablecoin for cross-border transactions with Chinese clients and suppliers.
Russian commodities giants have reportedly adopted stablecoins to settle cross-border transactions with China, as the U.S. Treasury Department has previously indicated it would impose secondary sanctions on financial institutions facilitating sanctions evasion.
According to Bloomberg, which cited top executives at two Russian metal companies, these producers have turned to the USDT stablecoin and, in some cases, settle their trades through Hong Kong. While the volume of these transactions is unclear, sources close to the companies indicate that current alternatives to stablecoins are slower or pose greater risks, such as having overseas bank accounts frozen. As of press time, Tether has made no public statements regarding the matter.
Cryptocurrencies are unlikely to enable Russia to evade international sanctions effectively. Chainalysis co-founder Jonathan Levin has emphasized the transparency of major blockchain networks, noting that this transparency makes it difficult for sanctioned entities to systematically launder large amounts of cryptocurrency.
“By mapping a single cryptocurrency wallet address to an illicit actor, whether that be a ransomware attacker or sanctions evader, law enforcement can unlock immediate insight into the entire network of services that facilitate the actor.”
Jonathan Levin
Despite the challenges, sanctioned regions continue to seek ways to circumvent Western restrictions. In mid-April, crypto.news reported that Venezuela’s state-run oil company PDVSA had increased its use of USDT for crude and fuel exports amid tightening U.S. sanctions.
Venezuelan oil minister Pedro Tellechea mentioned that the country employs “different currencies, according to what is stated in contracts,” with some contracts favoring cryptocurrency as a payment method. Following Tellechea’s remarks, Tether reiterated its commitment to comply with the OFAC SDN list and announced plans to ensure that sanctioned addresses are promptly frozen.
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