The UK sanctions Russian hedging stablecoin A7A5! Daily volume exceeds $1 billion, with total trading volume surpassing $41 billion.

The UK government recently imposed sanctions on Capital Bank of Kyrgyzstan and the crypto exchange Grinex, accusing them of supporting Russia in evading international sanctions with the Ruble stablecoin A7A5. This stablecoin is issued by Old Vector and claims to offer a "USDT alternative not affected by sanctions," with an average daily trading volume exceeding $1 billion and a total transfer value of $41 billion. This article deeply analyzes the operational mechanism of A7A5, compliance controversies, and its impact on the crypto market.

UK sanctions Russian-linked crypto entities

UK sanctions minister Stephen Doughty made it clear that the sanctions target financial networks supporting Russia in evading sanctions related to the Ukraine war. The sanctioned entities include Capital Bank of Kyrgyzstan, the cryptocurrency exchange Grinex, and the newly registered platform Meer. On-chain analysis firm TRM Labs pointed out that Grinex is the "successor platform" to the previously sanctioned Russian exchange Garantex.

A7A5 stablecoin: A financial hedging tool for Russia?

A7A5 is a yield-bearing stablecoin anchored to the Russian Ruble, providing holders with an annualized return of 50% through bank deposit interest. Its team publicly claims to aim to create a "USDT alternative that is not subject to sanction risks," supporting the Ethereum and TRON networks. According to Elliptic data, at the end of June, its daily trading volume surpassed $1 billion, with a total trading volume exceeding $41 billion.

How to exchange frozen assets using A7A5?

TRM Labs reported that A7A5 was used to replace the frozen assets of Garantex users. In March 2024, after the United States, Germany, and Finland seized the main domain name of Garantex, approximately 26 million USD worth of USDT was frozen. Old Vector issued equivalent A7A5 tokens to the original users, who can trade or redeem them through Grinex.

Compliance disputes and regulatory crackdown

The A7A5 official website claims that it "fully complies with the new regulations of Kyrgyzstan," but US and UK regulators accuse it of helping Russia evade sanctions. Notably, the UK has not directly accused Tether of participating in sanctions evasion, but The Wall Street Journal revealed that the US is investigating the possibility of Tether violating anti-money laundering rules. Tether CEO Paolo Ardoino dismissed the report as "old news hype."

Analysis of Trading Channels and Market Behavior

Apart from Grinex and Meer, A7A5 can also be traded through the sanctioned P2P exchange Bitpapa, Uniswap, Curve, and a dedicated DEX. By the end of June, its on-chain volume reached 8.5 billion USD, with 61% used for ruble exchanges and 39% for USDT exchanges. Russian Finance Minister Anton Siluanov has admitted that the country is combating Western sanctions through Bitcoin and digital currencies.

Historical Background: The Game Between Russia and Crypto Sanctions

Russia's crypto financial activities have long been subject to international restrictions. After Crimea was annexed by Russia in 2014, the West first imposed sanctions on Russia; following the outbreak of the Ukraine War in 2022, the sanctions escalated further. The emergence of A7A5 signifies Russia's attempt to reconstruct its cross-border payment system through cryptocurrency.

Conclusion

The A7A5 incident reflects the double-edged sword role of cryptocurrency in geopolitical conflicts: it has become a financial breakthrough for sanctioned countries, while also facing stricter regulatory scrutiny. As the UK and the US continue to target Russia-related crypto networks, the conflict between compliance and decentralization concepts will become more intense. Crypto users need to be wary of the sanction risks and asset security behind high-yield stablecoins.