Amid rising geopolitical tensions, the US government is contemplating imposing sanctions on certain Chinese banks.

According to a report by the Wall Street Journal, these measures aim to disconnect these banks from the global financial system. The primary concern is their involvement in facilitating trade that bolsters Russia’s military capabilities against Ukraine.

Although China claims that it has not provided weapons to Russia since the Ukraine invasion began, the US argues that the export of dual-use items like chips and machinery has critically strengthened Russia’s military. These proposed sanctions are seen as an “escalatory option” to be employed if diplomatic efforts fall short.

Historically, countries isolated from the global financial network have turned to cryptocurrencies as a workaround. For example, Venezuela’s state-run oil company, PDVSA, has shifted to using Tether (USDT) to evade renewed US sanctions. This move aims to protect its oil revenues from international banking constraints.

Read more: 9 Best Crypto Wallets to Store Tether (USDT)

Similarly, Russia has leveraged cryptocurrencies to sidestep Western sanctions. Russian firms are reportedly using Tether’s USDT to acquire vital components for military hardware. This strategy facilitates transactions that conventional financial systems less easily trace.

The increasing use of cryptocurrency in these contexts highlights its usage by countries to bypass economic sanctions.

Given these developments, growing speculation exists about China’s potential response to being similarly isolated. Traditionally, China has been strict in regulating cryptocurrencies, driven by concerns over financial instability and unauthorized capital outflows.

“Study the reallocation of Chinese capital from stocks and real estate to gold. A similar phenomenon has been happening with Bitcoin in China but not at full potential because of the restricted access. We will open this dam,” Venture Capitalist Andrew Kang said.

The possibility of Chinese banks facing exclusion from the global financial system could prompt a reevaluation of this stance. Particularly, it could encourage a more favorable regulatory approach to crypto.

Read more: Crypto Regulation: What Are the Benefits and Drawbacks?

Such a shift would align with the global trend of integrating cryptocurrencies into economic systems, especially in contexts where countries cannot access traditional financial avenues.

The post US Threats to Block Chinese Banks Globally Could Ease China’s Crypto Ban appeared first on BeInCrypto.

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