The Russian stablecoin A7A5 has reached $500 million in capitalization and has become the largest in the world among all non-dollar-pegged stablecoins. This happened despite international sanctions.
The token was issued in Kyrgyzstan and is tightly pegged to the ruble at a ratio of 1 to 1. According to CoinMarketCap and DeFiLlama, it already occupies about 43% of the entire stablecoin market not pegged to the dollar. The total volume of this segment is estimated at $1.2 billion.
Structure of the non-dollar stablecoin market. Source: DeFiLlama
The rapid growth of A7A5 is causing concern among Western regulators. They believe the project could be used to circumvent financial restrictions imposed on Russia after the invasion of Ukraine in 2022.
The digital ruble A7A5 grew by 250% — it is backed by a sanctioned Russian bank
The A7A5 project was launched in February by the company A7, which specializes in cross-border payments, and Promsvyazbank, which is state-controlled. One of the co-owners is considered to be the fugitive Moldovan banker Ilan Shor. All participants are already under sanctions from the US, UK, and EU.
The token was immediately positioned as a “digital ruble.” It is backed by fiat deposits in Kyrgyz banks, and holders receive daily passive income — about half the interest rate of these deposits.
The coin was issued on the Ethereum and Tron blockchains. A7A5 is presented as a tool for international settlements with Russia’s trading partners.
Almost immediately after launch, blockchain analysts linked the token to the Grinex exchange. It is considered the successor to the Russian platform Garantex, which is already under sanctions. In August, the US Treasury added Garantex and related companies to the sanctions list, stating that A7A5 is issued with the participation of Promsvyazbank and Ilan Shor.
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Soon after, the UK imposed sanctions against several banks in Kyrgyzstan. The reason — suspicion that Moscow is using the stablecoin infrastructure to bypass Western restrictions.
Despite all the restrictions, the capitalization of A7A5 barely changed all summer, and at the end of September it sharply increased. On September 25, the token’s value rose by $350 million in one day, which was a 250% increase. A7A5 overtook the euro stablecoin EURC from Circle and became the largest non-dollar stablecoin in the world.
According to Elliptic, as of September 26, there were already more than 41 billion A7A5 tokens in circulation, and the total transaction volume exceeded $68 billion.
On the project’s Telegram channel, this was called a historic milestone. According to the authors, A7A5 allegedly “proved that a national digital currency can not only be an alternative to the dollar, but a tool for global change.” Western authorities, however, are far less optimistic.
TRM Labs reports $1 billion in daily turnover, and the EU prepares sanctions against A7A5
Today Bloomberg reported that the European Union plans to introduce new restrictions against A7A5. As part of the initiative, any operations with this token may be banned for companies and users located in the EU.
It is also proposed to include banks from Russia, Belarus, and Central Asia in the sanctions list, which, according to authorities, help carry out cryptocurrency transfers in Moscow’s interests.
The growth of A7A5 coincided with the active development of alternatives by the Russian side. After being disconnected from the SWIFT system in 2022, the country has been looking for ways to bypass international barriers. Experts believe the new stablecoin has become a convenient solution for Russian companies: it speeds up international settlements and helps avoid payment freezes.
According to open data, settlements using A7A5 can be completed within five business days. This is much faster than through classic banking channels, where transfers can be delayed for weeks.
According to TRM Labs and Elliptic, the token’s daily turnover now exceeds $1 billion. By the end of August, the total transaction volume had already surpassed $41 billion.
TRM analysts also warn that A7A5 could be used to purchase dual-use goods — for example, equipment that can be used for both civilian and military purposes. Routes through China and Central Asia are mentioned.
Read also: The Bank of Russia will conduct a large-scale audit of the country’s crypto assets
The Center for Information Resilience (CIR) notes that in August, almost 78% of all operations with A7A5 were conducted through Chinese jurisdiction. In addition, the project has begun actively expanding in Africa — offices have appeared in Nigeria and Zimbabwe.
A7A5 came into the international spotlight after the Token2049 conference in Singapore, where one of the project’s top managers Oleg Ogienko appeared on stage. His participation caused a strong reaction: discussions began as to why crypto event organizers do not filter companies under sanctions.
Although the A7A5 team claims it is not connected to Shor and Promsvyazbank, documents say otherwise. Ilan Shor, who is wanted in Moldova for the theft of a billion dollars, owns 51% of A7. The remaining 49% belong to Promsvyazbank, which serves Russia’s defense sector. Both parties were sanctioned by the West in 2022.
Despite concerns about transparency and concentration of activity, A7A5 continues to gain momentum. The token already has about 24 thousand holders, and over the past few weeks, more than $100 million in liquidity in USDT has been added to its decentralized exchange.
