China and Russia Turn to Crypto and Barter Amid Trade Payment Crisis

Chinese regional banks have halted processing payments from Russia due to fears of secondary sanctions, pushing both countries to explore cryptocurrency and barter systems as alternative trading solutions.

Crypto Considered for Settling Trade Transactions Between China and Russia as Payment Options Wither

The bilateral trade between Russia and China is becoming increasingly challenging, with reports indicating that 98% of Chinese regional banks are no longer processing yuan-based transactions from Russia. This cessation of services, which had facilitated trade in early summer, is likely due to concerns over sanctions targeting these financial institutions.

Ekaterina Kizevich, head of Atvira, noted that her company received notification of payment suspensions on July 20. To navigate this trade impasse, Russian companies are considering routing payments through Russian credit institutions in China, although this method comes with an added 5% cost due to its complexity.

Barter trade has also been proposed, despite its inherent difficulties, as not all products can be exchanged this way. Amid these challenges, cryptocurrency emerges as a viable option to maintain trade flow, offering independent and neutral payment rails for businesses. Reports have surfaced about Russian metal producers utilizing stablecoins for transactions with Chinese suppliers since June.

With the recent approval of a law to regulate cryptocurrency payments, its adoption is expected to rise, especially as the threat of increased sanctions looms over Russia's trade capabilities.

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