The European Union (EU) has taken steps to clamp down on A7A5, a ruble-backed token that has been funneling billions through Kyrgyzstan into European crypto markets. Despite the sanctions, data shows that the sanctioned flow only represents a small fraction of the overall Bitcoin trading volume in the EU.
The EU recently proposed sanctions on A7A5, a stablecoin issued by A7, a cross-border payments firm, and Russia’s state-owned Promsvyazbank (PSB). These restrictions will prevent EU-based entities from engaging in transactions involving the token. The EU also plans to target several banks in Russia, Belarus, and Central Asia for enabling crypto-related transactions.
A7, owned by Moldovan banker Ilan Shor, and PSB were sanctioned by the UK, EU, and US in 2022 after Russia’s invasion of Ukraine. Despite the sanctions, A7’s operations have continued to expand. The firm launched a digital bill of exchange for international settlements through its Kyrgyz subsidiary, allowing holders to receive A7A5 tokens on the Tron network or exchange them for Russian rubles.
Elliptic, a blockchain analytics firm, calculated that there were 41.6 billion A7A5 tokens in circulation as of September 26, valued at $496 million, with a cumulative transaction value of $68 billion.
A7A5 has become the dominant route for converting rubles into crypto markets. Users convert Russian rubles into A7A5 within the A7/Old Vector setup, trade the stablecoin on the Kyrgyzstan-registered exchange Grinex, and then swap into dollar stablecoins, typically USDT. The tokens are issued on Ethereum and Tron before being routed to recipients, potentially including EU-based virtual asset service providers.
Another pathway involves Russia-based OTC and peer-to-peer markets into USDT, often facilitated on TRON. The US has sanctioned Netex24 and Bitpapa for operating crypto on-ramps serving sanctioned actors. Garantex, the largest OTC services provider, suspended services after Tether froze wallets holding roughly 2.5 billion rubles in March.
A third channel relies on regional “transit hubs,” with watchdog organizations highlighting Kyrgyzstan’s VASP ecosystem and Turkish authorities tightening stablecoin transfer limits in response to routing activity through their jurisdiction.
Grinex, created by Garantex employees after law enforcement disruptions, has become a key player in the ruble-to-crypto conversion process. A7A5 and Grinex now represent the primary rails for this conversion, replacing older infrastructure disrupted by sanctions.
Despite the significant role of A7A5 in the ruble-to-crypto flow, data suggests that it only represents a small fraction of the European Bitcoin trading volume. A conservative estimate places the total ruble exposure to EU Bitcoin markets at 2.37% of trading volume, indicating that the sanctioned infrastructure operates at the margin of European crypto liquidity.
The proposed EU sanctions targeting A7A5 aim to close a specific sanctions-evasion channel rather than address broader threats to European Bitcoin liquidity. While the sanctions may create compliance burdens for EU-based VASPs, the impact on mainstream European trading is expected to be limited.
Overall, the EU’s actions signal a coordinated effort to target crypto infrastructure used for sanctions evasion. However, the challenge lies in sustaining enforcement as sanctioned actors adapt to new channels. As authorities continue to crack down on these activities, the crypto landscape in Europe may see further changes in the coming months.