Hey all, Liam here. 

A7A5, a stablecoin pegged to the Russian ruble, has enjoyed some enviable press coverage over the last couple of weeks. 

It’s now officially the largest non-dollar-denominated stablecoin on the market and enjoyed $1 billion in volumes per day this summer. 

For a product that hit the market in January, the adoption has been relatively swift – and also surprising. 

That’s because authorities in the US and UK have also sanctioned several companies they alleged were behind A7A5 in August. The stablecoin, authorities indicate, has emerged as a key channel for evading sanctions placed on much of the Russian economy since its invasion of Ukraine in 2022. 

But the growth story will soon be coming to an end, according to Elliptic’s head of investigations, Matt Price. 

“Despite the boost you may see temporarily in volume, the more we’re attributing, the more it’s covered,” Price told DL News. “It’s going to make it much harder, from a liquidity standpoint, to really use that token.”

By identifying crypto addresses that have interacted with a sanctioned entity, analytics firms like Elliptic can inform trading venues with deep liquidity to block those addresses as well. The thinking goes that by blocking access to the largest pools of digital money, these sanctions-busting firms will dry up. 

Still, it’s a bit of a shell game. A7A5 emerged as an alternative to Tether’s USDT after the stablecoin issuer froze assets that were used on the sanctioned Russian crypto exchange Garantex. 

After the US Secret Service shut down Garantex – seizing some $26 million in cryptocurrencies — assets on that exchange moved to another platform called Grinex in Kyrgyzstan. Since 2022, Russia has leveraged Kyrgyzstan’s budding crypto ecosystem to evade sanctions, according to TRM Labs.

These days, the company behind A7A5 has even spun up its very own decentralised exchange, which handles the primacy of its volumes, according to Elliptic. 

And while crypto is involved here, Price describes the use of blockchain technology as simply a natural evolution of financial crime. 

“I can remember the evolution from check theft to prepaid debit cards to overseas wires, to, you name it,” he said. “Then it goes to crypto.”

This time, though, crime fighters can move a lot faster. 

“Think about like previous cases, like Paradise Papers, Panama Papers, you know that stuff that's been going on for years,” Price told DL News. 

“With crypto, every time this happens, we’re able to catch it a lot quicker.” 

ICYMI

• Crypto funding is broken. Can this new plan to help the Tornado Cash devs fix it?
  A new effort to fund the defence of Tornado Cash developers Roman Storm and Alexey Pertsev will serve as a “proof-of-concept” for a team within the Ethereum Foundation focusing on raising money for so-called public goods.

• Did ‘Bitcoin Jesus’ just cut a $48m deal with US authorities? ‘I’d love to say more’
  Roger Ver, the crypto investor once called “Bitcoin Jesus,” has struck a tentative deal with the US Justice Department to settle a criminal tax fraud case in the latest sign of Washington’s pivot.

• Token2049: Crypto industry runs victory lap among influencers and sanction-busting firms
  Token2049 attendees mingled with Wall Street banks, fintech giants, and sanctioned Russian entities, as well as actors from the Squid Game, influencers, former White House staff members-turned-crypto executives, and members of US President Donald Trump’s family.

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