The European Union is reportedly considering sanctions against A7A5, a Russian ruble-backed stablecoin and the world’s largest non-US-dollar pegged stablecoin.
The sanctions would prohibit EU-based organizations and individuals from engaging directly or indirectly through third parties with the token, according to a report from Bloomberg on Monday, citing documents related to the proposal.
Several banks in Russia, Belarus and Central Asia are in the firing line too, accused of enabling sanctioned entities to conduct crypto-related transactions, Bloomberg reports.
It is the latest effort by the EU to hobble Russian-tied crypto movements, following Sept. 19 sanctions on crypto platforms that blocked all transactions for Russian residents and restricted dealings with foreign banks tied to the country’s sector.
Cryptocurrency is just one of the many methods Russia has used to attempt to evade Western sanctions.
Russia has also been using a so-called shadow fleet, hundreds of vessels used to smuggle sanctioned goods, concealing the origins of its oil and conducting intermediary trading through other countries, along with a variety of different methods, according to global risk consultancy firm, Integrity Risk International.
At the same time, it’s using illicit gold trades to launder money, global policy think tank Rand said in a December 2024 report.
A7A5’s market cap spiked after sanctions
A week after the EU’s sanctions against crypto platforms were announced on Sept. 19, A7A5’s market capitalization spiked on Sept. 26 from around $140 million to over $491 million, a 250% jump in one day, according to CoinMarketCap.
A7A5’s market capitalization surged 250% a week after the EU first imposed sanctions. Source: CoinMarketCap
A7A5’s market capitalization is now holding steady at around $500 million as of Monday, which is roughly 43% of the total $1.2 billion market cap of non-US dollar stablecoins. Circle’s euro-pegged EURC is the second-largest, with a market capitalization of around $255 million.
EU sanctions require the backing of all 27 member states before they receive approval, and they could still be amended or changed before being implemented, according to Bloomberg.
The European Council describes sanctions as a tool to “aim at those responsible for the policies or actions the EU wants to influence,” and a way to “bring about a change in the policy or conduct of those targeted, with a view to promoting the objectives of the EU’s Common Foreign and Security Policy.”
EU joins US and UK with sanctions
The EU’s sanctions followed similar restrictions imposed by the United Kingdom and the US in August, which targeted parts of the financial sector allegedly used by Russia to bypass Western sanctions, including the Capital Bank of Central Asia and its director, Kantemir Chalbayev.
Kyrgyzstan crypto exchanges Grinex and Meer, a country in Central Asia that issues A7A5, were also blacklisted, along with entities tied to the infrastructure supporting the ruble-backed stablecoin.
A7A5 was launched in February on the Ethereum and Tron networks by Moldovan banker Ilan Shor and Russia’s state-owned lender Promsvyazbank. It was billed as a “token backed by a diversified portfolio of fiat deposits held in reliable banks within Kyrgyzstan’s network.”
Despite the sanctions and a ban by Singapore, the company behind A7A5 appeared at Token2049, where it hosted a booth. Executive Oleg Ogienko also spoke on stage.
However, the organizers later removed the project from the event and their website.