China and Russia explore stablecoins to circumvent international sanctions, prompting potential shifts in U.S. crypto policy.
Points
- China and Russia use stablecoins and CBDCs to evade sanctions and establish an autonomous financial system.
- The U.S. Treasury proposes a three-pronged approach to tackle crypto-related activities in sanctioned countries.
- Donald Trump advocates for embracing crypto in geopolitical discussions.
China and Russia are exploring the use of stablecoins to expand their crypto exposure and complement their Central Bank Digital Currencies （CBDCs） to establish an autonomous financial system to operate outside of international sanctions. As Russia faces over 16,500 sanctions from various countries due to its invasion of Ukraine, it has significantly increased its use of digital assets to circumvent these restrictions.
U.S. Response to Sanctions Evasion
Addressing the Senate Banking Committee, U.S. Undersecretary of the Treasury Wally Adeyemo pointed out the increasing circumvention of traditional financial regulations using cryptos. To address this concern, Adeyemo proposed a three-pronged approach to enforce secondary sanctions against foreign crypto businesses for sanctioned entities. In addition, he called for stringent implementation of Know Your Customer （KYC） and
Anti-Money Laundering （AML） procedures by crypto industry firms while addressing challenges posed by foreign crypto platforms.
Trump’s Stance on Crypto
US presidential candidate Donald Trump recently re-emphasized the need to embrace crypto and bring it to the forefront of geopolitical discussions. Trump highlighted the importance of adopting crypto to ensure that the U.S. remains competitive on the global stage, especially against countries like China that are rapidly advancing in the crypto space.
“If we don’t do it, China is going to pick it up and China’s going to have it—or somebody else, but most likely China.” – Donald Trump
Joining this conversation was the chief economist of Tressis, Daniel Lacalle. He pointed out that the strength and beauty of crypto lies in its decentralization, making it resistant to control by any single government.
“There is no such thing as nationalist crypto. The beauty of the crypto market is that it is completely diversified and decentralized. The concept of government control of crypto makes no sense to anyone that understands independent currencies.” – Daniel Lacalle
Conclusion
As China and Russia turn to crypto for global payments amid sanctions, the U.S. is prompted to rethink its policies regarding the use of cryptocurrencies in sanctioned countries. The proposed measures by the U.S. Treasury, along with Trump’s advocacy for embracing crypto, highlight the growing importance of digital assets in global economic and geopolitical strategies.