A7A5, a Russian ruble-backed stablecoin launched in Kyrgyzstan, has achieved transaction volumes exceeding $9.3 billion in just four months since its emergence. The stablecoin was created to facilitate cross-border payments for Russia while circumventing international sanctions. Despite a modest market capitalization around $156 million and having only about 24,000 holders, the trading volume is disproportionately high compared to Kyrgyzstan's $17.5 billion GDP.
The stablecoin operates mainly on the Tron and Ethereum blockchains, and its ruble reserves are reportedly backed by Promsvyazbank, a sanctioned Russian state-owned bank linked to Russia's defense industry. Blockchain data points to a concentrated flow of tokens among approximately 124 wallets, suggesting circulation within a limited group potentially linked to financial or internal banking activities.
The Digital exchange Grinex—believed to be the successor to the shuttered Russian exchange Garantex—has played a central role in A7A5’s trading volume, although Grinex denies formal ties to Garantex. Notably, Garantex users with frozen balances appear to have been credited accounts on Grinex. Grinex listings allow A7A5 to be traded against other stablecoins like USDT and actual USD.
This development fits into broader geopolitical efforts by Russia and associated entities to utilize cryptocurrencies to bypass financial sanctions imposed by the US, EU, and UK. An official from Russia's Finance Ministry has even identified A7A5 as a tool to challenge dollar dominance. The Financial Times and crypto investigators suggest the stablecoin is being used by a restricted set of actors for substantial transactions, with analyses revealing potential connections to controversial political figures and prior sanctioned platforms.
While the full extent of illicit use remains uncertain, the performance of A7A5 highlights new complexities in sanction evasion strategies through crypto. Kyrgyzstan's partnership with Binance co-founder Changpeng Zhao to develop blockchain technology and launch the stablecoin points toward a growing regional crypto industry potentially influenced by Russian interests.
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