The ruble-indexed A7A5 stablecoin, which was launched to overcome the sanctions imposed by the West after Russia’s attacks on Ukraine in 2022, is preparing for a new era with the developments towards the end of the war. Following US President Donald Trump’s words, “The end of the war between Ukraine and Russia is very close,” Kiev and Moscow’s approach to an agreement has brought the future of digital currencies such as A7A5, which were developed with the aim of overcoming sanctions, to the agenda.
New era if sanctions are lifted
The A7A5 stablecoin was created to provide a fast and low-cost solution for Russian business excluded from Western financial systems. Company official Oleg Ogienko argues that this technology is not only an alternative to its dollar and euro indexed competitors, but also may have different areas of use if international trade is opened in the future. Ogienko told CoinDesk that even though the sanctions are lifted, there is a need for fast and practical payment solutions.
“Our stablecoin has a high chance of remaining competitive after the sanctions are lifted. The main goal is to provide fast and practical payment opportunities to those who want to trade with Russia.”
In the Chainalysis report published in April, it is predicted that the share of stablecoins in global payments, although still small, is increasing rapidly and will turn into one of the main layers of global finance in the near future. According to Juniper Research, international intercompany stablecoin transaction volume will reach $13.4 billion in 2024. This figure is expected to rise to 5 trillion dollars in 2035.
Digital Ruble and regulation discussions
Lawmakers in Russia have brought forward legal regulations aimed at placing digital assets within a legal framework for cross-border payments. The Central Bank of Russia is also examining the feasibility of a stablecoin at the national level. The A7A5 team is in talks with market players and regulators on relevant regulations but raises the risk that current drafts will be “overly restrictive” from a commercial perspective.
“We are taking an active role in this process. However, in the draft regulations, some derivative transactions, which are the main source of profit of exchange activities, are not taken into account. This may create a difficulty in terms of the business model of new platforms.”
Recommended limits for retail users in Russia are also a matter of debate. Under the current proposal, non-qualified investors would be limited to a maximum of 300 thousand rubles per year, or about $4 thousand.
Competition in the stablecoin market
A7A5 is far behind the industry giants in terms of its market volume. While Tether’s USDT has a market value of approximately $190 billion, Circle’s USDC is at $77 billion. According to CoinGecko data, the market value of A7A5 is around 500 million dollars.
One of the important areas where stablecoins can be used in international trade is the energy sector. The closure of the Strait of Hormuz as a result of the conflict between the USA and Iran increased Russia’s role in global oil production. South Korea and countries in Southeast Asia are considering turning to Russia again for their energy needs.
Although the main usage area of A7A5 is cross-border trade, the fact that it offers a return of approximately 13.5% due to the effect of high interest rates in Russia also increases investor interest. The company official emphasizes that they attract the attention of return-oriented investors, but their main goal is to facilitate the trade flow.
In addition to the sanctions, restrictions on the A7A5 continue at events held in the West. For example, although sponsorship proposals were accepted at an event in France, direct brand promotion was not allowed.
