In the context of sanctions, Kyrgyz business introduces stablecoins in foreign trade settlements

Under the conditions of tough sanctions imposed on one of Kyrgyzstan's main trading partners, Russia, domestic businesses are increasingly resorting to the use of cryptocurrency for foreign trade settlements. Investing.com writes with reference to Pavel Nechaev, co-founder of TokenSpot, a licensed virtual asset trading operator, who told Bits.media.

This approach is due to the fact that financial organizations, fearing secondary sanctions, refuse to conduct transactions for companies with ties to the Russian market.

According to Pavel Nechaev, the settlement scheme is as follows: the exporter delivers goods from Kyrgyzstan, receives payment in USDT, then converts the funds through an exchange platform into national or foreign currency (som, dollar, ruble) and withdraws them by cashless payment with a subsequent bank declaration. As a result, accounting and tax authorities receive a full set of necessary documents.

The growth in the use of cryptocurrency is also due to the adoption of the law “On Virtual Assets” in 2022. According to Investing.com, the volume of cryptocurrency transactions through cryptocurrency exchange platforms has reached $4.2 billion since 2022. The bulk of transactions are made using USDT, followed by USDC and BUSD.

According to Elena Chigibaeva, CEO of WeinCrypto DAO, Kyrgyz entrepreneurs actively use stablecoins for settlements when buying cars in China, as well as for re-exports to Kazakhstan and Russia.

An additional factor contributing to the spread of cryptocurrency settlements is the limited correspondent relations of Kyrgyz banks with foreign financial institutions, which complicates international payments.

As Arstanbek Abdikaparov, co-founder and CEO of the cryptocurrency investment holding Royal, noted, Western banks often view payments to Kyrgyzstan as risky, making it difficult to make them. As such, companies are increasingly turning to cryptocurrency transactions, but not all of them have the necessary competencies to process them. His company provides services for account opening, cryptocurrency wallet risk verification and conversion of digital assets into fiat funds.

In addition, such platforms allow companies not only to optimize international settlements, but also to pay salaries to employees in CIS countries and Europe, as well as to use cryptocurrency in investment activities.

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