Earlier this week, US President Donald Trump told reporters that the end of the war between Ukraine and Russia was “very close”, with kyiv and Moscow apparently close to reaching some sort of agreement.
For A7A5 – a ruble-pegged stablecoin designed to circumvent sanctions imposed on Russia following its neighbor’s 2022 invasion – any resulting relaxation of these measures raises an existential question: What will happen when the conditions that created your market disappear?
According to Oleg Ogienko, executive at Stablecoin, the company survives. Like its dollar and euro equivalents, the ruble token enables faster and cheaper international settlement than traditional bank payments, he said, and, like them, will find wider applications as international trade opens up.
“Our stablecoin has a good chance of remaining competitive even after sanctions are lifted,” Ogienko told CoinDesk in Hong Kong. “If you trade with Russia, you need convenient and fast means of payment.”
Although stablecoins represent only a fraction of global payments, their popularity is growing and they are likely to become a vital part of global finance, Chainalysis said in an April report. International business-to-business transactions are expected to reach $13.4 billion this year, and climb to $5 trillion by 2035, according to Juniper Research.
One possible use could be to pay for Russian oil. The closure of the Strait of Hormuz due to the war between the United States and Iran has fueled strong demand for oil from the world’s third-largest producer. The country accounts for 11% of global production, surpassed only by the United States and Saudi Arabia, according to the U.S. Energy Information Administration.
The shutdown hit Asia hard. South Korea plans to resume oil imports from Russia – halted following the war in Ukraine – and many Southeast Asian countries, such as the Philippines and Indonesia, see it as a lifeline.
From workaround to infrastructure
Ogienko’s argument is that the A7A5 is evolving from a sanctions-era workaround to a longer-term commercial infrastructure.
“The idea is that we can create an exchange rail between your stablecoin and ours,” he said. “Do not use $USDT, $USDCUS dollars. We simply do direct exchanges.
Attached $USDT is the world’s largest stablecoin, with a market capitalization of approximately $190 billion. Internet Circle (CRCL) $USDC is No. 2 to 77 billion dollars. A7A5’s market cap is around $500 million, according to CoinGecko data.
You would think that in Hong Kong, any stablecoin other than the dollar would be welcome. After all, Hong Kong itself is the target of US sanctions.
While the territory’s financial authorities say institutions have no obligation to implement sanctions against Russia because they were not adopted by the United Nations (the only sanctions in force in Hong Kong), its new licensed stablecoin regime is managed by HSBC and a company led by Standard Chartered.
Both financial institutions are deeply tied to Western infrastructure and sanctions compliance, between West and East, making direct cooperation with a sanctions-linked Russian stablecoin difficult.
Working with Moscow
Lawmakers in the Russian Duma are proposing legislation to create a formal legal framework for digital assets in cross-border settlements, while the Bank of Russia studies the feasibility of a domestic stablecoin.
Ogienko said A7A5 was participating in consultations around this framework, while warning that the current draft risks creating a legal market that is too restrictive to be commercially viable.
“We participate in these consultations. We interact with regulators and market participants,” he said.
But the law, as it is currently worded, needs improvement.
One concern is that crypto derivatives, which Ogienko described as the main profit driver of exchanges, are not being considered, which could leave newly licensed platforms with a weak business model in their early years.
Retail caps are another issue, with current proposals limiting unqualified investors to 300,000 rubles ($4,000) a year.
Central bank digital currencies (CBDCs) have been touted as the future of cross-border commerce, but a future Russian CBDC would not necessarily threaten the business, he argued.
“It’s not a competitor for us at all,” Ogienko said, describing CBDCs as a slow-moving state infrastructure focused more on fiscal oversight than trade.
A7A5 can also appeal for reasons other than payments. Ogienko said the token currently offers a yield of around 13.5%, reflecting high Russian interest rates.
“Of course, we attracted some people because of the yield,” he said, while adding that cross-border trading remains the primary use case for the token.
Life under sanction
For now, sanctions continue to shape the practical realities of doing business, limiting the token’s options for generating publicity.
Ogienko described a crypto conference circuit open to A7A5 as a sponsor (the company sponsored Token2049 in Singapore), but may be hesitant to display its logo.
A recent blockchain conference in France, for example, offered A7A5 the opportunity to sponsor a dinner but not display its brand or participate as a speaker.
“You can pay us, but you can’t place your logo,” he recalls.
When asked how employees of a heavily sanctioned company pay for international travel, Ogienko’s answer was less blockchain futurism and more old-school pragmatism.
“Cash,” he said, “is king.”