A rouble-backed stablecoin called A7A5 saw transaction volumes soar past $40 billion in July, data from blockchain analyst Elliptic shows, as reported by Reuters.
Launched in January by sanctioned lender Promsvyazbank and payments firm A7, the coin runs out of Kyrgyzstan to help Russian businesses and individuals send cross-border payments without using SWIFT.
The surge in transfers reflects growing demand for alternative payment routes under sweeping Western sanctions imposed after Russia’s 2022 invasion of Ukraine.
Surge in July Activity
Elliptic’s report found that daily transfers through A7A5 now exceed $1 billion, bringing the total moved via the coin to $41.2 billion. The firm noted a sharp uptick in volumes, liquidity and token circulation during July.
TRM Labs, another blockchain research group, recorded similar totals, confirming that A7A5 has become a key player in sanction-bypassing schemes.
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Sanctions Drive Alternative Routes
Since February 2022, Russian banks have lost SWIFT access, making it difficult to process international trades. Promsvyazbank and A7 saw an opportunity to fill the gap.
At launch, Promsvyazbank said A7A5 would let Russian firms pay for goods and services in China without relying on traditional wire transfers. The coin pegs its value to the rouble, enabling stable settlements even when banks face messaging restrictions.
Governance and Oversight Concerns
TRM Labs flagged A7A5 as part of a network of Kyrgyzstan-registered entities likely linked to sanctions evasion. The group warned that the stablecoin may also support the import of dual-use goods from China into Russia via Central Asia.
Dual-use items can serve civilian or military purposes, raising alarms among Western regulators. Both Elliptic and TRM say they are working with law enforcement to trace funds and identify the networks behind the transactions.
Market Capitalisation and Liquidity Moves
Elliptic data shows that A7A5’s market capitalisation tripled to $521 million in under two weeks. The stablecoin issuer announced on Telegram that it added $100 million in Tether to its decentralised exchange.
According to A7A5, liquidity for the USDT trading pair vanished within minutes of being posted, underscoring intense demand for a reliable exit option. Tether did not immediately answer requests for comment on the partnership.
Industry Reaction
Blockchain experts warn that rapid stablecoin growth can undermine financial sanctions. “When volumes climb this fast, it means bad actors have found a way around global rules,” said one compliance analyst in London.
Others note that peer-to-peer trading on decentralised exchanges makes monitoring harder. Regulators are now considering tighter controls on stablecoins that issue from jurisdictions with looser oversight.