A7A5, a ruble-backed stablecoin launched in Kyrgyzstan to help Russia facilitate cross-border payments and bypass international sanctions, has moved $9.3 billion in transactions in just four months.
Furthermore, current estimates suggest that A7A5’s market cap is only $156 million. To reach these trade volumes in such a short window, the same few accounts would need to routinely circulate tokens amongst themselves.
The Success of Kyrgyzstan’s A7A5 Stablecoin
For the last few months, Kyrgyzstan has been working to foster a domestic crypto industry. In April, the nation partnered with Binance co-founder Changpeng “CZ” Zhao to develop its blockchain ecosystem, launching A7A5 soon after.
According to Russian media, Kyrgyzstan’s stablecoin has proved a major success, moving $9.3 billion in four months.
To be blunt, Kyrgyzstan’s own domestic economy does not seem strong enough to power that much stablecoin volume. The country has practically no crypto sector, and its nominal GDP is $17.5 billion.
At $9.3 billion in four months, A7A5’s circulation is well on track to outpace the entire country.
In other words, the nation had outside help. After all, A7A5 is a ruble-backed asset, and Russia has a vested interest in using crypto to bypass sanctions.
An official from Russia’s Finance Ministry even singled out A7A5 as a potential asset in challenging dollar dominance.
“Russian business figures and government officials have been talking for a while about how they might use cryptocurrency to evade sanctions in a large-scale way, particularly by creating their own stablecoin,” claimed Eliza Thomas, a senior investigator at the Center for Information Resilience (CIR) in London.
Of course, these are pretty serious claims to take for granted. Where’s the hard evidence that sanctions evasion is powering Kyrgyzstan’s new stablecoin?
It’s hard to get some exact data on this illicit trade, but BeInCrypto exclusively published some reports on the developing topic.
Russia’s Shadow Crypto Exchange
Garantex, one of Russia’s largest centralized exchanges, was shut down in March after US and EU authorities seized the platform. However, previous analysis determined that several employees launched a new exchange, Grinex, which took over many Garantex assets.
Crucially, blockchain data showed huge transfers of A7A5, proving the connection.
Garantex was one of the first exchanges to list Kyrgyzstan’s stablecoin, and the platform was still using it two months after its shutdown.
If nothing else, this shows these activities were a major artery for A7A5’s trading volume. Moreover, the Financial Times claimed the exchange represents the largest share of all transactions.
The publication estimated that 12 billion A7A5 tokens are currently in circulation, which translates to a market cap of $156 million.
To reach $9.3 billion in volume so quickly, the same accounts would need to routinely pass these tokens back and forth.
Kyrgyzstan might not even supply the stablecoin’s fiat backing. Reports further claim that A7A5’s ruble reserves are stored in Promsvyazbank, a Russian state-owned bank that lends heavily to the nation’s defense industry.
There are a lot of uncertain facts about this case, but the mounting evidence paints a convincing picture. If Kyrgyzstan wants to build a successful crypto sector, it might be partnering with Russia on this stablecoin to do it.
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