A new stablecoin connected to Russia, called A7A5, has quickly grown to a value of $500 million, making it the biggest stablecoin outside of the U. S A dollar stablecoin that is still used even with many international restrictions.

A stablecoin from Kyrgyzstan that is linked 1:1 to the Russian ruble now makes up about 43% of the total $1. 2 billion market for stablecoins that are not based on the US dollar, according to data from CoinMarketCap and DeFiLlama.

Its fast rise has made Western officials worried that the project might be helping Russia get around the financial restrictions put in place after it invaded Ukraine in 2022.

“Digital Ruble” A7A5 soars 250% as a banned Russian bank supports stablecoin

A7A5 started in February. It’s a cross-border payments company run by Ilan Shor, a banker from Moldova who’s on the run, and Promsvyazbank, which is owned by the Russian government. Both organizations are facing penalties from the U. S, UK, and the European Union.

The token was created as a “digital ruble” that is supported by real money stored in Kyrgyz banks. People who hold this token can earn a small amount of money every day, which is half of the interest from those bank deposits.

A7A5 was first launched on Ethereum and Tron to help with international payments for trade with Russian partners.

Shortly after it started, blockchain investigators connected the project to Grinex, a cryptocurrency exchange seen as the replacement for the banned Russian platform Garantex. The United States In August, the Treasury took action against Garantex and related companies, saying that Shor is a part-owner of A7A5’s issuer, together with Promsvyazbank.

The United Kingdom (U. K) Sanctions were placed on several banks in Kyrgyzstan because there was proof that Moscow was using a stablecoin network to avoid the Western financial system.

Even with these sanctions, A7A5’s market value stayed steady during the summer and then surged in late September. On September 25, its market value went up by $350 million in just one day, which is a 250% rise. This made it the top non-dollar stablecoin, surpassing Circle’s euro-backed coin, EURC.

Data from Elliptic shows that by September 26, there were over 41 billion A7A5 tokens available, and the total money moved in transactions was more than $68 billion.

The project’s Telegram channel celebrated a big achievement, saying that A7A5 has shown that a national digital currency can be a good alternative to the dollar and can also make a big difference in the world. But, people in Western countries see it in a different way.

TRM Labs Reports $1 Billion in Daily Transactions Through A7A5 as EU Considers Sanctions

Earlier today, Bloomberg said that the European Union is getting ready to place new restrictions on A7A5, banning EU-based companies from doing any business with the token.

The plan aims to focus on some banks in Russia, Belarus, and Central Asia that are said to have helped with crypto payments linked to Moscow.

A7A5’s growth happened at the same time as Russia’s effort to create other payment systems after it was removed from the SWIFT payment system in 2022. Experts say the stablecoin provides an easy solution for Russian businesses facing problems with slow international payments.

Public records show that companies using A7A5 can complete international transactions in just five working days. This is much quicker than the weeks or even months that regular banks usually take.

Data from blockchain tracking companies Elliptic and TRM Labs show that A7A5 is now moving over $1 billion every day, with the total amount of transactions exceeding $41 billion by the end of August.

TRM Labs also said that the stablecoin might be helping people buy items that can be used for both regular and military purposes. These items are being traded through routes that go through China and Central Asia.

The Centre for Information Resilience (CIR) said that almost 78% of A7A5’s transactions in August happened in China. CIR also mentioned that A7A5 has grown in Africa by opening offices in Nigeria and Zimbabwe.

A7A5 got noticed worldwide at the Token2049 conference in Singapore last month, where company leader Oleg Ogienko spoke on stage. Its presence at the event led to discussion about the rules for crypto industry events, with people asking for stricter rules to stop banned companies from getting attention.

Although A7A5 says it is independent from Shor and PSB, official papers show that both are still very involved. Shor, who is wanted in Moldova for a $1 billion scam called “the theft of the century,” owns 51% of A7, while PSB owns the other 49%.

PSB, a bank that helps Russia’s defense industry, was hit with sanctions by the U. S and its friends in 2022.

Even though some people are worried about how open it is and where most of the activity is happening, A7A5 is still gaining more support and progress.

The token has gained about 24,000 holders, and in the past few weeks, more than $100 million in USDT has been added to its decentralized exchange.