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New financial sanctions: Yuan replacing Dollar

The USA imposes new sanctions on Russian financial institutions – this time including the Moscow Stock Exchange. Dollar-ruble trading thus moves entirely underground, also to Tether and Bitcoin.
On June 12, the U.S. Treasury Department announced a new round of sanctions against 300 Russian targets.
The Treasury Department states that Russia is on the verge of transitioning to a full war economy. The line between civilian and military economy is blurring, no element of the economy is innocent anymore, and every cent interacting with Russia is potentially tainted with blood.
The sanctions have multiple objectives. They aim to tighten secondary sanctions affecting financial institutions in third countries that cooperate with Russia’s war economy. Additionally, they intend to broadly deny the Russian industry access to American, European, and Asian software and IT services.
Besides a long list of Russian technology companies, the sanctions mainly target the financial sector. Not only are Russian banks sanctioned, but also their subsidiaries abroad, in China, India, and Kyrgyzstan. Central institutions of Russia’s financial infrastructure, such as the Moscow Exchange (MOEX), the National Clearing Center (NCC), and the National Settlement Depository (NSD), are also blacklisted.
Russia’s ruler Vladimir Putin has long spoken about „ dedollarization “ – now the U.S. enforces dedollarization. Russia’s financial sector is now cut off from the dollar, rendering official ruble-dollar trading dead.
Initially, the news triggered something like panic in the Russian financial system. The Moscow Exchange went offline, and several major banks, such as Gazprombank, locked logins to prevent a bank run.
Meanwhile, the dollar market has gone underground. Cryptocurrencies also play a role here. For a long time, cryptocurrencies, primarily Bitcoin and Tether (USDT), have served as vehicles for Russian companies to circumvent sanctions and conduct business with global partners , especially in Asia. This shift could now logically extend to foreign exchange trading.
Both Russia and the U.S. are unusually united in wanting to dedollarize the country. However, the markets want redollarization, and USDT is the instrument of choice for that .
Nevertheless, markets in Russia are often not very liquid. While cryptocurrencies are widespread in Russia, from ordinary citizens to the highest levels of government, hackers, intelligence agencies, technology importers to oil exporters, the trading itself still occurs in a grey area, while Russia and the ruble remain red flags for international exchanges.
One of the most important Russian cryptocurrency exchanges is Garantex . It hosts active trading of rubles against dollar-tokens, Bitcoin, and Ethereum. On this and other platforms, the electronic dollar-ruble trade, which officially no longer exists, can still be observed.
As usually happens when price discovery moves into underground and grey markets, official and market prices start diverging. While officially one pays 89 rubles for a dollar, a USDT now costs nearly 92 rubles. Such a premium of about three percent is also reflected in Bitcoin.
Overall, however, the fallout for the Russian financial industry seems limited, as can be judged two days later. The fog after the initial shock has lifted, MOEX goes back online, banks open logins again. The ruble’s price has slightly declined, the MOEX index has dropped somewhat. But this hardly indicates a crash.
Although the ruble-dollar price discovery has become more confusing and volatile, it is not dramatically so. According to Reuters , 60 percent of foreign exchange trading was already occurring OTC (over-the-counter) this year, outside of exchanges. This trend is merely being forced to complete; cryptocurrencies maintain a liquid electronic market, enabling transparent real-time price discovery.
Another trend accelerated by the sanctions. In May, the Chinese Yuan overtook the dollar as the most important currency in ruble trading. Around 54 percent of the foreign exchange market occurred in Yuan. The dollar and euro have massively lost influence in the Russian financial sector over the past two years, with a soft landing now slightly bumpy on the ground.
Therefore, the Russian central bank made official what was already occurring: the Yuan replaces the dollar as the lead currency. Going forward, the Yuan-Ruble pair will serve as the reference point for all other currency pairs on the Moscow Exchange. The Yuan becomes a proxy for the dollar, just as the dollar once was a proxy for gold in the Bretton Woods system.
The division of global currency zones has reached a new level. The Yuan thus emerges as the biggest challenger to the dollar.
However, there is still no sign of dedollarizing global trade. The dollar remains by far the most important currency. Despite efforts by the BRICS nations to reduce dependence on the dollar, it has not only maintained its position as the global lead currency in recent years but has even extended it.
Connecting Russia to the Yuan hints at a new phase in the tectonic shifts in the international currency landscape. Whether this step will bounce off the dollar or set in motion a dynamic that sustainably enhances the Yuan’s position remains to be seen.
Cryptocurrencies like Bitcoin and USDT will play a certain role, even if they are not yet in the spotlight. Bitcoin stands ready as a third option alongside the dollar and Yuan, either as a unit of account or settlement currency. Tether stablecoins like USDT offer themselves as the currency markets desire, countering dedollarization, potentially redirecting it into a re- and hyperdollarization, bypassing traditional U.S. financial sanctions.
Simultaneously, crypto markets will become important whenever the frameworks creak and groan. When governments regulate and limit trade, set prices, and force the market underground, crypto markets will provide liquidity and help find and recognize prices.

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