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Russian companies use cryptocurrency for international payments to avoid G7 and EU sanctions
Some major Russian companies have taken advantage of the fast and fluid nature of cryptocurrency to complete international transactions while avoiding potential actions by Western countries. At the time of writing, USDT, the largest stablecoin on the market, has been used by two major metals companies to facilitate payments as further sanctions are imposed on alternative payment methods by the G7 and the EU.
Businesses are turning to cryptocurrencies as an alternative for cross-border payments
To avoid sanctions from the Group of Seven (an international organization made up of developed countries such as France, the United States, Germany and Japan) and the European Union, some Russian companies have turned to cryptocurrency as a means of cross-border payments. According to a precedent Bloomberg reportat least two unauthorized companies in the country have used the file stable currency USDT to complete commodity trade with China.
Furthermore, to further prevent sanctions, these companies have also used other options, such as using small and regional banks as intermediaries to handle these transactions. However, these institutions have become increasingly cautious.
Cryptocurrencies are known to offer opportunities for faster and cheaper transactions. In less than a minute, an international payment can be completed with minimal fees. Additionally, crypto transactions are not subject to sanctions and are decentralized, so they do not require any centralized authority or intermediary to complete payments. This is why it has been selected as an alternative medium by these companies.
Speaking on the topic, Ivan Kozlov, cryptocurrency expert and founder of Resolv Labs, discussed the advantages of using cryptocurrencies as a payment method, highlighting their speed and efficiency. “With stablecoins, the transfer can take as little as 5-15 seconds and cost a few cents, making such transactions quite efficient when the sender already has an asset base in stablecoins,” he said.
Judging by this, other companies may follow the same step. As the G7 and EU continue to impose sanctions in an attempt to isolate Russia from its close allies, the use of stablecoins and other cryptocurrencies may increase over time. Target financial institutions that use the Financial messages Bank of Russia System (SPFS) – a Russian replacement for SWIFT, the de facto standard for cross-border transactions – is the target of the EU and the G7.