Europe targets Kremlin stablecoin with new round of sanctions

Suddenly, cryptocurrencies are being added to the European sanctions list against Russia.

Last Thursday, the European Union added a 19th package to the existing sanctions against Russia. This latest package was distinctive in that it focuses on cryptocurrencies, particularly the famed stablecoin A7A5, which was specifically developed by the Kremlin to evade economic sanctions imposed by the West.

Garantex

In 2022, following the invasion of Ukraine, Russia was subjected to a series of economic and financial sanctions. To circumvent these sanctions, the Kremlin increasingly used crypto. The Russian government used the crypto platform Garantex to make payments to other countries to purchase goods it wasn’t allowed to purchase through the regular financial system using fiat.

However, after Iran used Garantex to make payments to Hamas to carry out the terrorist attack on Israel in October 2023, the crypto platform was placed on a sanctions list by nearly all Western countries.

It’s role was then taken over by Grinex, another crypto platform operating from Kyrgyzstan. Until recently, that platform received funds from the Kremlin in A7A5, a stablecoin developed by the Russians to circumvent European sanctions.

In this manner, the Kremlin had already paid over €6 billion to foreign companies for products it is normally prohibited from importing.

But now A7A5 is also banned from use. Crypto is thus once again playing a role in geopolitics, albeit a rather flawed one.