SaaS: Stablecoin-as-a-Strategy

In this week’s newsletter, I continue on the subject of cryptoassets, turning your attention to the role of stablecoins in sanction evasion practices.

One stablecoin stands out.

Marketed as a cross-border payments tool for sanctioned jurisdictions, A7A5, a rouble-pegged stablecoin, has already processed USD 9.3 billion in just four months.

Even more striking: nearly all of the 12 billion tokens in circulation (~USD 9.3 billion) are concentrated in just 124 wallets. Not bad for a coin only a few months old.

It gets better.

A7A5 is tied to a network of sanctioned banks, PEPs, and infrastructure that appears to have emerged in the wake of Garantex’s collapse, all pointing to a new frontier in Russia’s sanctions evasion strategy.

Some key points:

• The backing is sanctioned. A7A5 claims to be fully collateralised by rouble reserves held at Promsvyazbank, a Russian defence bank sanctioned by the US, UK, and EU.

• The timing is not coincidental. Rise of A7A5 coincided with the US takedown of Garantex, a Russian crypto exchange that had moved over USD 60 billion since 2022. A large share of its frozen Tether holdings was reportedly shifted to A7A5 shortly before enforcement actions hit.

• The geography is intentional. A7A5 and the Grinex exchange, its primary trading venue, were both launched in Kyrgyzstan, described by some as a “friendly jurisdiction,” by others as a “transhipment hub,” and most recently flagged as a red flag by the Hong Kong banking sector.

• The ownership is murky. The stablecoin is linked to Ilan Șor, a fugitive Moldovan businessman under UK sanctions. The source found digital infrastructure that overlaps between his political influence network and A7A5. Coincidence? Unlikely.

What does this all mean?

We’re no longer talking about stablecoins in the spirit of tech entrepreneurship.

A7A5 is a state-aligned stablecoin and a geopolitical instrument designed to bypass Western financial infrasturcutre and gatekeeper controls. And it works. For now.

Source: CIR Investigation

Thanks for reading.

If you are tracking digital assets in high-risk jurisdictions or want to discuss how these developments may affect your business, let’s connect.

Alexey