The European Union is reportedly contemplating sanctions against A7A5, a Russian ruble-backed stablecoin recognized as the largest non-US-dollar pegged stablecoin globally.
The proposed sanctions aim to bar EU-based organizations and individuals from any direct or indirect engagement with the token through third parties, according to a Bloomberg report from Monday, referring to documents concerned with the proposal.
Moreover, several banks in Russia, Belarus, and Central Asia are also under scrutiny, accused of facilitating crypto transactions for sanctioned entities, as reported by Bloomberg.
This marks the EU’s latest initiative to disrupt Russian-affiliated crypto activities, following sanctions imposed on Sept. 19, which halted all transactions for Russian residents and limited interactions with foreign banks linked to the nation’s sector.
Cryptocurrency is one of the numerous tactics Russia has employed to evade Western sanctions.
Additionally, Russia has been utilizing a so-called shadow fleet, comprising hundreds of vessels employed to smuggle sanctioned commodities, disguising the origins of its oil, and engaging in intermediary trading through other nations, along with several other strategies, according to the global risk consultancy, Integrity Risk International.
Simultaneously, illicit gold trades are being used to launder money, as indicated in a December 2024 report by the global policy think tank Rand said.
A7A5’s market cap surged post-sanctions
A week after the EU’s sanctions against crypto platforms were revealed on Sept. 19, A7A5’s market capitalization skyrocketed from approximately $140 million to over $491 million on Sept. 26, marking a 250% increase in just one day, according to CoinMarketCap.
A7A5’s market capitalization currently remains robust at around $500 million as of Monday, accounting for roughly 43% of the total $1.2 billion market cap of non-US dollar stablecoins. Circle’s euro-pegged EURC is the second-largest, boasting a market cap of around $255 million.
For sanctions to be enacted, the approval of all 27 EU member states is necessary, and there could be amendments or alterations before implementation, as reported by Bloomberg.
The European Council describes sanctions as a means to “target those responsible for the policies or actions the EU seeks to influence,” and a method to “effect a change in the policy or conduct of those targeted, aiming to advance the aims of the EU’s Common Foreign and Security Policy.”
EU aligns with US and UK on sanctions
The EU’s sanctions coincide with similar measures taken by the United Kingdom and the US in August, which focused on elements of the financial sector that Russia allegedly uses to circumvent Western sanctions, including the Capital Bank of Central Asia and its director, Kantemir Chalbayev.
Related: Putin adviser claims US using stablecoins, gold to devalue its $37T debt
Crypto exchanges in Kyrgyzstan, Grinex and Meer, were included in the blacklist, along with entities associated with the infrastructure supporting the ruble-backed stablecoin.
A7A5 was launched in February on the Ethereum and Tron networks by Moldovan banker Ilan Shor and Russia’s state-owned lender Promsvyazbank. It was marketed as a “token backed by a diversified portfolio of fiat deposits secured in reliable banks within Kyrgyzstan’s network.”
In spite of the sanctions and a prohibition by Singapore, the company behind A7A5 participated at Token2049, where it maintained a booth. Executive Oleg Ogienko also presented on stage.
However, the event organizers subsequently removed the project from the conference and their website.
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