European Union Mulls Sanctions On Russian Ruble-Backed A7A5 Stablecoin

The European Union (EU) is considering sanctions against a Russian ruble-backed stablecoin called A7A5, which is the world’s largest non-US-dollar stablecoin.

According to a Bloomberg report that cited documents related to the proposal, the sanction would prohibit EU-based organizations and individuals from engaging directly with the token or indirectly through third party platforms.  

The proposed sanctions will require the backing of all 27 member states before they receive approval. The proposed sanctions could also still be amended or changed before they are implemented, the report added. 

EU Block’s Crypto Access For Russian Users

The proposed action is part of the EU’s broader strategy to clamp down on financial instruments that have helped Russia get around Western sanctions.

It also follows sanctions imposed earlier this year in September, which blocked transactions for Russian residents. New limits were imposed on interactions with foreign banks that were linked to Russia’s crypto sector as well. 

Multiple financial institutions across Belarus, Central Asia, and Russia also face scrutiny from authorities, who believe that these banks facilitated sanctioned crypto-related activity. This includes the movement of assets that have been linked to blacklisted entities. 

However, crypto is just one of the transactional vehicles used by Russia to evade Western sanctions. 

Global risk consultancy firm Integrity Risk International says Russia has also been using hundreds of vessels to smuggle sanctioned goods, concealing the origins of its oil, and conducting intermediary trading through other countries.  What’s more, Russia has been using its illicit gold trades to launder money as well.

EU Joins Other Nations In Sanctioning Russia

If its sanctions are approved, the EU will join the likes of the US and UK who have already imposed similar sanctions against Russia in August. 

Both of those nations’ sanctions were imposed on parts of the financial sector that have allegedly been used by Russia to evade the Western sanctions. Among those that have been targeted by the sanctions are the Capital Bank of Central Asia and its director Kantemir Chalbayev. 

Grinex and Meer, crypto exchanges based in Kyrgyzstan, have also been blacklisted as well as entities that have been linked to the infrastructure powering the ruble-backed A7A5 stablecoin. 

A7A5 Stablecoin Market Cap Soars After EU Bans

A7A5 was deployed on the Ethereum and Tron networks in February this year by a Moldovan banker named Ilan Shor and Promsvyazbank, which is Russia’s state-owned lender. 

The token was introduced as a “digital ruble” that was backed by fiat deposits in Kyrgyz banks. It also offered holders a daily passive income equivalent to half the interest on those deposits. 

An investigation performed by the Financial Times using on-chain data shows that more than $6 billion worth of transactions have taken place using the A7A5 stablecoins. The investigation also found that parts of its supply were “deleted and recreated” to obfuscate sanctions links. 

Around a week after the EU announced its sanctions against several crypto platforms, the capitalization for the A7A5 stablecoin soared. On Sept. 26, the stablecoin’s value went from approximately $140 million to more than $491 million, marking a 250% jump in a single day. 

It has since continued to rise, and stands at around $507.41 million as of 5:34 a.m. EST, according to data from CoinMarketCap. 

A7A5 market cap (Source: CoinMarketCap)

In the past 24 hours, there has also been a more than 131% spike in the token’s trading volume to $8.03K.

A7A5’s current market cap is roughly 40.67% of the capitalization of non-US stablecoins, data from DefiLlama shows. 

The next-biggest non-US-dollar stablecoin is Circle’s EURC, which has a market cap of around $253.62 million. 

Despite all of the sanctions and a ban by Singapore, members of the parent company of the token appeared at the Token2049 conference. The company was also a “Platinum Sponsor” of the event and hosted a booth as well, 

The company’s executive Oleg Ogienko also spoke on stage. 

However, the company and its representatives were later removed from the event and its website after the Token2049 team faced backlash from the crypto community.