Russia’s two largest unsanctioned metal producers have reportedly begun using Tether’s USDT stablecoin for cross-border transactions with Chinese clients and suppliers. Russian commodities giants have turned to stablecoins to settle cross-border transactions with China as the U.S. Treasury Department has indicated it would impose secondary sanctions on lenders facilitating sanctions evasion.

According to top executives at two Russian metal companies, these producers have opted for the USDT stablecoin, sometimes settling their trades through Hong Kong. While the volume of these trades remains unclear, sources close to the companies claim that current alternatives to stablecoins are slower or riskier, potentially leading to frozen overseas bank accounts. As of now, Tether has made no public statements regarding this matter.

Cryptocurrencies are unlikely to allow Russia to evade international sanctions effectively. Chainalysis co-founder Jonathan Levin highlighted the transparency of major blockchain networks, which makes it challenging 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.”

Nevertheless, sanctioned regions continue to explore ways to circumvent Western restrictions. In mid-April, Venezuela’s state-run oil company PDVSA increased its use of USDT in crude and fuel exports amid tightening U.S. sanctions. Venezuelan oil minister Pedro Tellechea noted that the country uses “different currencies, according to what is stated in contracts,” with some contracts preferring cryptocurrency as a payment method. Following Tellechea’s statement, Tether reiterated its commitment to adhere to the OFAC SDN list and announced plans to ensure sanctioned addresses are promptly frozen.

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