Russia could be turning to a new crypto called A7A5
Russia could be turning to a new cryptocurrency called A7A5 to allow money to flow in and out of the country and avoid Western sanctions, experts have told AFP. Multiple rounds of international sanctions have been imposed on Moscow since its February 2022 invasion of Ukraine seeking to ramp up economic pressure to halt the war.
But the launch of A7A5 in February this year opened up an alternative payment method for Russian businesses and individuals to sidestep sanctions when trading with foreign partners, the UK-based non-profit Centre for Information Resilience (CIR) said in a report.
A7A5 is a stablecoin—a form of cryptocurrency backed by traditional assets—in this case pegged to the ruble, making it harder for Western authorities to monitor than dollar-based alternatives.
It was launched by a pro-Russian Moldovan oligarch and a Russian state-owned bank as 'the first ever ruble-pegged stablecoin,' George Voloshin from anti-money laundering group ACAMS told AFP.
While it is not widely used yet, experts say its creation marks a significant step in Russia's efforts to reduce its dependence on major crypto companies—many of which cooperate with Western governments.
Since Russia was kicked out of the international banking system SWIFT and hit with asset freezes and investment bans, Moscow has already turned to crypto to sidestep financial restrictions imposed by the United States and its allies. Stablecoins are especially attractive because they are less volatile than other cryptocurrencies.
People have also used cryptocurrency to donate directly to both the Ukrainian army and Russian militias, according to several analytics firms such as Elliptic.
But Russia has faced a problem: USDT, the most popular stablecoin, is tied to the US dollar and controlled by a company called Tether, which cooperates with US and European authorities.
Earlier this year, Tether blocked $28 million in USDT held in wallets on Garantex, Russia's largest crypto exchange, which was shut down following a global crackdown on illegal transactions.
'That was a real wake-up call' for Russia, said Elise Thomas, senior investigator at CIR. 'It made them think that they need their own stablecoin, they need something that they control,' she added.
Just before Garantex was shut down, tens of millions of dollars were moved from USDT into A7A5, according to data from crypto tracking firm Global Ledger.
A7A5 is backed by deposits in Promsvyazbank, a Russian bank under sanctions for its ties to the government and the military. The coin is traded on Grinex, a crypto exchange based in Kyrgyzstan—a country seen as friendlier to Russian interests and less vulnerable to Western pressure.
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