With the Russian ruble-backed stablecoin A7A5 capitalizing on sanctions imposed by the West on Russian entities, the token itself may now be sanctioned by the EU.
Documents obtained by Bloomberg indicate that the EU is already exploring the possibility of sanctioning the token, forbidding EU entities and individuals from using A7A5 directly or via third parties.
While the final decision has not yet been made, the stablecoin’s recent rapid growth was likely fueled by other EU sanctions. In September, the economic bloc announced its 19th sanctions package, which, among other measures, included restrictions on sanctions-evading Russian crypto platforms and transactions for the first time.
This move has only increased interest in the A7A5 stablecoin, as Russian entities and individuals have been seeking new ways to transact while bypassing restrictions.
Just a few days after the EU announcement, the self-reported market capitalization of A7A5 surged from around $141 million to $493 million, and at the time of writing stands at $500 million.
While these figures cannot be publicly verified, the team behind the project claims that the circulating supply of the token is around 41.6 billion, which corresponds to the half-billion market capitalization, making A7A5 one of the largest non-US dollar-backed stablecoins.
Self-reported market capitalization of A7A5:
As reported, the stablecoin was created by A7 LLC, an entity sanctioned by the EU, UK, the US, and Singapore, which helps Russian businesses make cross-border payments.
The company is said to be owned by convicted Moldovan banker Ilan Shor, the Russian state-owned Promsvyazbank, and VEB.RF, a Russian state-owned development and investment corporation that’s also heavily sanctioned.
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In its latest report this week, the Centre for Information Resilience (CIR), an independent organization dedicated to exposing human rights violations and threats to democracy, stated that A7 uses multiple methodologies for sanctions evasion and claims to have over 30 shell companies in its network of “payer companies.”
According to CIR, the company also claims to process roughly 1,500 transactions daily and to have over 10,000 customers. Trade with China has emerged as the dominant focus of A7’s activities to date, while the project is reportedly expanding into other markets, including Africa.
Meanwhile, in the latest controversy, Token2049, a major crypto conference in Singapore that concluded last week, was forced to remove references to its “platinum sponsor” A7A5, even though its director of international development, Oleg Ogienko, was given stage time during the event.
On its Telegram channel earlier in October, the stablecoin’s team wrote that they “have already proven that a national digital currency can be not only an alternative to the dollar but also a driver of global change.”
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