The economic ties between Russia and China are facing a shift. Chinese regional banks, which were once pivotal in handling payments from Russia, are now stepping back due to fears of secondary sanctions. This development has led Russian businesses to explore alternative payment methods like cryptocurrency and barter to keep trade flowing.
The Shift in Payment Channels
Recent reports reveal that Chinese regional banks have started rejecting yuan-based transactions originating from Russia. The hesitation is largely due to concerns over sanctions from Western nations. Ekaterina Kizevich from Atvira highlighted that her bank suspended payments in July, reflecting broader trends among banks.
Alternatives for Trade Continuity
Russian companies are now considering options like using Russian bank branches in China, although these come with a cost increase of up to 5%. Barter trading is also being considered, but it isn’t suitable for all types of goods. This financial friction has given rise to the use of cryptocurrency, particularly stablecoins, by Russian companies. For example, Russian metal producers have been using stablecoins for transactions with Chinese suppliers since June.
The Role of Cryptocurrency
With the introduction of new laws regulating crypto payments, digital assets are becoming a more attractive option for businesses looking to circumvent traditional financial systems and sanctions. The adaptability and speed of crypto transactions offer a viable solution where conventional methods fall short.
Conclusion
As Chinese banks withdraw from handling Russian payments, the use of cryptocurrency is emerging as a practical alternative. This shift may pave the way for broader crypto adoption in international trade, especially in regions impacted by geopolitical tensions.
Takeaways:
- Chinese regional banks are stepping back from processing Russian payments due to secondary sanctions fears.
- Russian companies are exploring alternatives like using stablecoins, barter, and Russian bank branches in China.
- Cryptocurrency is playing an increasingly important role in maintaining trade between Russia and China.
Source: Cryptodnes
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How Chinese Banks’ Rejection of Russian Payments Is Accelerating Crypto Adoption was originally published in The Dark Side on Medium, where people are continuing the conversation by highlighting and responding to this story.
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