The 19th sanctions package targets the A7A5 stablecoin, a Russian ruble-backed digital currency that has processed over $70 billion in transactions since launching in February 2025.

The EU described A7A5 as “a prominent tool for financing activities supporting the war of aggression.” Starting November 25, 2025, all transactions involving the stablecoin will be prohibited across the 27-member bloc, marking a significant evolution in how governments combat sanctions evasion through cryptocurrency.

What Is A7A5 and Why Does It Matter?

A7A5 is a stablecoin launched in February 2025 in Kyrgyzstan. Unlike volatile cryptocurrencies like Bitcoin, stablecoins are pegged to real-world currencies—in this case, the Russian ruble. For every A7A5 token purchased, one ruble is deposited into Promsvyazbank, a Russian state-owned bank that finances the country’s defense industry.

The scale of A7A5’s operations is remarkable. According to blockchain analytics firm Elliptic, the stablecoin handles over $1 billion in daily transfers. By September 2025, it had become the world’s largest non-dollar stablecoin, with a market value jumping 250% in a single day to reach nearly $500 million.

Source: consilium.europa.eu

What makes A7A5 unusual is its ownership structure. The majority owner is Ilan Shor, a Moldovan businessman convicted of fraud who faces charges of election interference. Promsvyazbank owns the remaining stake. Both Shor and the bank are under international sanctions for their roles in supporting Russia’s war effort and undermining democratic elections in Moldova.

The Garantex Connection

The story of A7A5 cannot be separated from Garantex, a Russian cryptocurrency exchange that became notorious for laundering money from ransomware attacks and darknet markets. The U.S. Treasury first sanctioned Garantex in 2022 after it processed over $100 million in illicit transactions.

In March 2025, a coordinated international operation seized Garantex’s websites and froze $26 million in cryptocurrency. Within days, a new exchange called Grinex appeared in Kyrgyzstan, run by the same people. Garantex customers who lost access to their funds were given equivalent amounts in A7A5 tokens, allowing them to continue operations despite the sanctions.

This cat-and-mouse game demonstrates the challenge of enforcing traditional sanctions in the cryptocurrency world. When authorities shut down one exchange, operators simply create another under a different name. The A7A5 stablecoin facilitated this transition, processing approximately $9.3 billion through Grinex in just four months.

The U.S. Treasury sanctioned both Grinex and the company that issues A7A5 tokens (Old Vector LLC) in August 2025. The U.S. State Department offered a reward of up to $5 million for information on Aleksandr Mira Serda, Garantex’s co-founder, and up to $1 million for other key leaders. Now the EU has joined with its own comprehensive ban.

How A7A5 Helps Russia Evade Sanctions

Western sanctions have cut many Russian banks off from the SWIFT international payment system, making it difficult for Russian companies to conduct international trade. A7A5 provides a workaround. Russian businesses can convert rubles into A7A5 tokens, trade those tokens for U.S. dollar-backed stablecoins like Tether, and then convert to any currency they need in other countries.

This system has proven particularly valuable for trade with China. According to the Centre for Information Resilience, 78% of A7 transactions flow through Chinese jurisdictions. The stablecoin has also expanded into African markets, with offices opened in Nigeria and Zimbabwe.

The trading patterns reveal that A7A5 serves mainly businesses rather than individual crypto traders. Most activity happens during business hours on weekdays, not the 24/7 pattern typical of retail cryptocurrency trading. Russia’s government formally recognized A7A5 as a digital financial asset, allowing exporters and importers to use it officially for trade settlements.

Election Interference and Political Operations

Beyond sanctions evasion, leaked documents reveal A7A5’s role in political interference. Internal files from A7 companies show employees discussing apps used to pay political activists and conduct polling in Moldova. One app called Taito was flagged by Moldovan police for illegal electoral financing and voter bribery.

These political operations are funded through cryptocurrency, allowing them to continue despite sanctions on Shor and his associates. Chat logs show million-dollar USDT transfers for “treasury” purposes, demonstrating how digital assets enable sanctioned individuals to maintain financial operations.

Ilan Shor boasted in a September 2025 speech to Russian President Vladimir Putin that A7 had facilitated 7.5 trillion rubles (roughly $89 billion) in cross-border transactions for Russian businesses in just ten months. The numbers underscore how cryptocurrency has become central to Russia’s strategy for maintaining international trade despite Western sanctions.

What the New Sanctions Mean

The EU sanctions package targets multiple entities beyond just the A7A5 token itself. Sanctions hit the stablecoin’s developer, its Kyrgyz issuer, and a Paraguay-based exchange that facilitated A7A5 trading. The EU also banned eight banks and oil traders from Tajikistan, Kyrgyzstan, the UAE, and Hong Kong for helping Russia circumvent restrictions.

Five additional Russian banks face transaction bans: Istina, Zemsky Bank, Commercial Bank Absolut Bank, MTS Bank, and Alfa-Bank. The package also prohibits EU companies from providing crypto services that could help Russia build alternative financial infrastructure.

For EU-based cryptocurrency exchanges and service providers, the November 25 deadline means they must identify and block any transactions involving A7A5. Companies that fail to comply face potential penalties and sanctions themselves.

However, enforcement remains challenging. A7A5 operates on the Ethereum and Tron blockchains, meaning it exists across thousands of computers worldwide with no central point of control. When U.S. authorities sanctioned Grinex in August, the stablecoin continued growing anyway. After previous sanctions, operators destroyed and reissued over 80% of all A7A5 tokens to break connections with sanctioned wallet addresses, then continued operations with the new tokens.

The Crypto Sanctions Arms Race

This represents the first time the EU has banned a specific cryptocurrency and comprehensively targeted crypto infrastructure supporting Russia. The move follows similar actions by the U.S. and UK, showing coordinated Western efforts to close cryptocurrency loopholes in sanctions enforcement.

Between July 2024 and June 2025, $376.3 billion worth of cryptocurrency transactions were conducted in Russia, according to blockchain analytics firm Chainalysis. This massive volume demonstrates how crucial digital assets have become to Russia’s economy under sanctions.

The situation highlights the dual nature of cryptocurrency technology. While digital currencies offer potential benefits for financial inclusion and efficiency, they also create new challenges for law enforcement and sanctions enforcement. The borderless nature of blockchains, combined with the difficulty of identifying transaction participants, makes traditional regulatory approaches less effective.

Russia has responded by actively legalizing cryptocurrency for international trade. Finance Minister Anton Siluanov has publicly supported using digital currencies to counter sanctions, acknowledging their usefulness for cross-border capital flows. The government granted A7A5 official status, integrating it into Russia’s formal financial system.

Digital Dollars Won’t Win This War

The EU’s ban on A7A5 marks a watershed moment in sanctions policy, acknowledging that cryptocurrency has become too important to ignore. By targeting not just exchanges but the digital currency itself, regulators are adapting their tools to match the threat.

Yet the decentralized nature of blockchain technology ensures this will remain an ongoing challenge. As one exchange gets shut down, another appears. As one token gets sanctioned, operators can create new ones. The question isn’t whether these sanctions will have an impact—they will. The question is whether that impact will be enough to meaningfully restrict Russia’s ability to use cryptocurrency for sanctions evasion and whether Western authorities can keep pace with the rapidly evolving tactics of those seeking to circumvent restrictions.

For now, November 25 represents a new front in the economic war between Russia and the West, fought not with traditional financial weapons but with lines of blockchain code.

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Filed under: Bitcoin - @ October 23, 2025 11:15 pm