Article source: Wu Says Blockchain
Author | Joey Wu Says Blockchain
At the end of March 2025, a seemingly insignificant cryptocurrency exhibition concluded in Moscow. The Crypto Summit was so small that one could complete a tour in 'ten minutes,' yet it unexpectedly gathered focus from government, industry, technology, and finance: how can the CIS (Commonwealth of Independent States) region find paths for survival and breakthrough through stablecoins and blockchain technology amidst financial blockades of war and sanctions?
This report is based on observations from the exhibition, conversations with officials, and in-depth research on multiple local projects, restoring the cryptocurrency ecosystem and the digital finance ambitions of 'de-dollarization' taking shape in the CIS region. The report content will be divided into three parts: exhibition situation, policy interpretation, and local projects in the CIS.
Heat in Closure: Observations from the Moscow Crypto Summit
The Crypto Summit was held on March 19-20 at the MTS LIVE HALL in Moscow and is the most important annual event in Russia's crypto industry. The conference was sponsored by BingX, with Algorithm as the chief partner, gathering numerous leading companies from China and Russia, such as FBOX, Intelion, and MEXC. The agenda covered hot topics such as the 2025 crypto market outlook, Russian regulatory policies, BRICS digital assets, Web3 trends, mining, and investment, attracting many guests, including Ivan Chebeskov, the Deputy Minister of Finance of Russia, State Duma officials, representatives from the central bank, and CEOs of leading companies to speak.
The exhibition was limited in scale—one could complete a tour of the entire area in ten minutes—yet it featured highly regional characteristics. The exhibitor composition clearly reflects the current state of the CIS blockchain industry: 40% were mining machine sellers, all equipment being manufactured in China, with Chinese manufacturers monopolizing the CIS mining market; 25% were cryptocurrency exchanges, including locally prominent BingX, MEXC, the smaller Bitget, and local CEX platforms Keine and Rapira; DEX platforms included TON-based Storm and meme coin-focused Alpha DEX; 15% were cross-border payment and asset transfer service providers, created specifically for Russian companies to bypass international sanctions; 10% were KOLs and media, blockchain association organizations, with the remainder being small project parties providing compliance services such as anti-money laundering.
The language environment, communication atmosphere, and crowd composition throughout the exhibition highlight the extreme localization and closed nature of the CIS market: most exhibitors do not use English and are loosely connected to the international crypto market. Crypto entrepreneurs are generally active in the Middle East, with Dubai becoming the center for Russian crypto entrepreneurs, while those who have lived long-term in the CIS region are rare. War, conscription, and regulatory pressure have created a 'dual vacuum' of local talent loss and project flight.
However, the mining business is a major highlight. The Russian side has shown a tolerant and even encouraging attitude toward mining at the policy level, with many Chinese exhibitors revealing that 'mining machines sell particularly well in Russia,' indicating a strong hardware demand in the market.
The exhibition scale was small, but Russia placed great importance on this event. Officials from the Ministry of Finance, the Ministry of Internal Affairs, parliament, and experts in digital economy cooperation with BRICS countries participated in the exhibition, continuously speaking and interpreting policies to set the direction for future crypto regulation in the CIS region.
Breaking through the cracks of sanctions: interpretation of CIS region's crypto policies
In the current context of high geopolitical tension and escalating economic sanctions, Russia is gradually forming a unique cryptocurrency policy path. The core of this policy system is to explore cross-border payment solutions and financial sovereignty that bypass the Western financial system, based on stablecoins and blockchain.
The meeting released three major policy signals:
First, incorporate crypto assets into the 'de-dollarization' strategy and develop domestic stablecoins; second, gradually regulate related laws and open special administrative zones for compliance sandbox pilots in cryptocurrency; third, in terms of international cooperation, strengthen collaboration with BRICS countries and develop a cross-border settlement framework based on 'multilateral anchoring and currency mutual recognition' under the BRICS mechanism. Overall, Russia's crypto policy is gradually shifting from defensive responses to strategic deployment, emphasizing the reconstruction of financial sovereignty and global settlement capabilities through digital technology under the pressure of sanctions.
Domestic stablecoin
Ruble-based stablecoin A7A5
In February 2025, a company registered in Kyrgyzstan named Old Vector launched a new stablecoin called A7A5, pegged to the Russian ruble at a 1:1 ratio. This digital asset is designed to facilitate cross-border payments between Russia and other countries, especially in the context of current sanctions. The project team reported that the new stablecoin's liquidity is provided by 'real bank deposits with high overnight interest rates opened at reliable banks (PSB) that have an agency network in Kyrgyzstan.' Old Vector commits to releasing reserve reports weekly and undergoing independent audits every six months.
Technical characteristics, security, and operating environment of A7A5
A7A5 is issued on the Ethereum (ERC-20 standard) and Tron (TRC-20 standard) blockchains, ensuring broad compatibility and usability. The liquidity of the stablecoin is provided by ruble deposits held at the Russian Industrial Bank (PSB), which has an agency relationship with Kyrgyzstan's financial institutions. Users can store A7A5 in decentralized wallets such as Trust Wallet and OKX Web3 Wallet, as well as in accounts supported by exchanges. To ensure security and compliance, the A7A5 smart contract includes built-in features for freezing (blacklisting) and burning (BurnBlackFunds) tokens in certain wallets. Other stablecoin issuers (e.g., Tether) also use similar mechanisms to prevent illegal trading and protect users.
On March 6, 2025, the Garantex exchange suspended its operations and trading due to the freezing of Tether (USDT) worth 2.5 billion rubles. In addition to the asset freeze, the U.S. Secret Service also blocked the Garantex website with the support of Europol and law enforcement in Germany and the Netherlands. U.S. authorities accused the exchange of having ties to ransomware hackers and illegal dark web markets. The exchange stated in a press release: 'We have bad news. Tether has joined the war against the Russian cryptocurrency market and frozen our wallets worth over 2.5 billion rubles. We will temporarily stop all services, including cryptocurrency withdrawals, while our entire team works to resolve this issue.' Garantex stated that the exchange is a leader in ruble liquidity, providing unrestricted cryptocurrency access for Russian users. The platform supports rubles and any Russian bank cards. According to Garantex, USDT stablecoin is the most popular cryptocurrency among Russians. The trading volume of the ruble-USDT pair far exceeds that of other cryptocurrency pairs. The platform team warns that all USDT tokens in Russian wallets may now be at risk.
On February 24, the EU included the Russian cryptocurrency exchange Garantex in a new round of sanctions against Russia. This is the EU's first imposition of restrictions on a Russian cryptocurrency exchange. The platform has been under U.S. sanctions since April 2022.
Sanctions official statements claim that Garantex has close ties to Russian banks that are under EU sanctions. Specifically, platform users can deposit and withdraw funds using cards from Sberbank, T-Bank (formerly Tinkoff Bank), and Alfa Bank, which have already been sanctioned under European legislation. The ruble-based stablecoin A7A5 successfully responded to the Garantex exchange freeze event and was dubbed 'the first self-rescue case in the crypto market.' (Reported by rbc.ru)
Passive income mechanism for A7A5
One of the unique features of A7A5 is its ability to generate passive income. According to the project whitepaper, 50% of the daily income from overnight deposits is distributed to stablecoin holders. Accumulation occurs automatically without requiring additional action from users. Overnight deposits are short-term bank deposits where funds are held overnight and returned the next day along with accrued interest. If deposited before a weekend or holiday, the deposit period is extended to the next working day, and interest is calculated for the entire deposit period.
Taking the A7A5 stablecoin as an example, holders' income is generated by depositing reserve funds into overnight deposits, providing stable and predictable passive income. Sergey Mendeleev, founder of InDeFi SmartBank, told Bits.media that the A7A5 contract is standard, and the only difference is that it uses a mechanism that automatically calculates interest for token holders, essentially functioning like a bank deposit.
I'm certainly glad that the concept of the crypto ruble we proposed a year and a half ago has received so much support and solid implementation. Now we can respond to the criticisms from the central bank and the financial supervisory authority. I hope people can buy these tokens with fiat currency or, conversely, sell them for real rubles at any PSB branch,' Mendeleev said.
Previously, sources from Hash Telegraph reported that the U.S. company Tether is actively adding wallets to the blacklist and blocking users from accessing USDT stablecoins.
A7A5 availability on exchanges
The cryptocurrency exchange Garantex announced the launch of 'the first security-regulated ruble stablecoin.' The platform offers trading pairs of A7A5 with rubles and USDT. Additionally, the Bitpapa market has opened the possibility of trading crypto rubles, expanding the use case of A7A5 in various transactions. The issuer plans to release reserve reports weekly and undergo independent audits every six months to ensure transparency and user trust.
The launch of A7A5 represents an important step in the development of digital financial instruments, helping to simplify and accelerate international settlements for Russian enterprises. The combination of ruble linkage, passive income, and built-in security mechanisms makes A7A5 an attractive tool for companies engaged in foreign economic activities. Reference material (vc.ru)
Garantex, the Russian domestic exchange
This cryptocurrency exchange emerged in Estonia in 2019 but initially focused on the Russian market. One of the platform's co-founders, Sergey Mendeleev, the former head of the Yasenovo district in Moscow, stated that Garantex is an innovative cryptocurrency startup that offers customers zero spread and zero commission for converting fiat currency to cryptocurrency. In an interview in 2019, Mendeleev said: 'We decided to temporarily do a non-commercial project, whose main goal is to connect sellers and buyers of cryptocurrency directly through an established average weighted exchange rate that benefits both parties.'
Mendeleev's partner is Stanislav Drugalev, founder of the custodial service provider Caravan-Telecom. Under their leadership, the exchange operated for two years. In February 2021, Drugalev died in a car accident in Dubai. A month later, Mendeleev sold his stake in Garantex to Irina Chernyavskaya. What he is doing now is unknown. According to The Bell, another co-owner of the site might be Alexander Ntifo-Siao. The U.S. Department of Justice still lists him as one of the beneficiaries of the exchange, but under a different name: Alexander Mira Cerda. In December 2021, he and his partner Pavel Karavitsky became co-owners of a Russian legal entity fintech company, which owns the garantex.academy domain that was seized by U.S. authorities. Some media have linked Karavitsky to Russian intelligence services. It is said that he had served as a security expert for economic security at VBRR Bank and Peresvet Bank, and was also the 'security officer' of Garantex Bank. It is still unclear who owns the cryptocurrency exchange.
What is Garantex cryptocurrency exchange known for?
After international payment systems left Russia and banks were prohibited from conducting cross-border transfers, Garantex began to present itself as a platform that 'does not comply with EU and U.S. sanctions against Russian users' and collaborates with everyone.
The exchange itself has been under U.S. sanctions since spring 2022, but not for helping to evade sanctions: U.S. authorities suspect it of laundering over $100 million, related to Russia's largest dark web market, which was shut down by U.S. and German intelligence agencies in March 2022. Researchers at Chainalysis noted that the amount of suspicious transfers might be even larger: from 2019 to 2021, transfers amounted to $645 million. However, the sanctions did not stop the exchange's growth. Market participants told The Bell that after Binance exited the Russian market, Garantex became the largest ruble exchange and withdrawal platform. Companies needing to pay overseas suppliers also began conducting cryptocurrency transactions through this platform.
In March 2024, U.S. and British authorities began investigating $20 billion in transactions conducted through Garantex. In February 2025, the EU imposed sanctions on the platform cooperating with sanctioned banks.
Kyrgyzstan's national stablecoin
Gold-backed stablecoin replaces CBDC
Although many countries are developing Central Bank Digital Currencies (CBDC), Kyrgyzstan has chosen a different path. The authorities did not create a national digital currency but decided to support a gold-backed stablecoin, USDKG. The project recently underwent an audit by Consensys Diligence, a team known for its work on MetaMask and other blockchain solutions. This audit confirmed the security of the USDKG smart contract, bringing it closer to a full launch.
Why did Kyrgyzstan abandon CBDC?
Unlike countries developing digital currencies (China's digital yuan, Russia's digital ruble), Kyrgyzstan is skeptical about CBDC. The main arguments against it are: centralized control—the state would have complete control over citizens' transactions; privacy risks—users would lose financial independence; limited benefits—state-owned digital currencies do not solve volatility issues. Instead, the authorities support the USDKG token, which is linked to gold prices and operates according to the ERC-20 standard. The main advantages are: global availability—the asset can be used for international settlements; transparency—the token's flow is tracked on the blockchain; stability—historically, gold's value retention capability has been better than many fiat currencies.
The USDKG audit was conducted by the team Consensys Diligence, which specializes in the security of blockchain projects. During the examination, the following aspects were studied: code correctness—ensuring that the smart contract operates as intended; security—preventing potential attacks and vulnerabilities; compliance with project objectives—whether the contract fully serves its purpose, including blacklist, compliance, and other specified functions. During the analysis, several medium and small vulnerabilities were identified, which the team quickly fixed: the transferFrom() function did not consider the blacklist, which could allow blocked users to trade. There was no verification of empty owners and compliant addresses, which could lead to management failures. After the fixes, Consensys confirmed the security of the USDKG smart contract, making the project ready for launch.
The USDKG token structure includes: owners—manage the issuance and destruction of tokens; compliance team—monitor the sanctions list and freeze assets when necessary. Blacklisting is a mechanism that restricts suspicious wallets. It is managed using Gnosis Safe multi-signatures, adding a level of security. Consensys recommends regularly updating security versions to avoid potential vulnerabilities.
Why is Kyrgyzstan betting on gold?
Kyrgyzstan has rich gold reserves, and converting gold into digital assets can bring economic benefits. Potential advantages include attracting foreign investment—gold remains a popular capital preservation tool; transparency in fund flow—blockchain simplifies control and auditing; reducing dependence on volatile cryptocurrencies—gold-backed assets are more stable.
What’s next?
The USDKG project is about to launch officially. Authorities are planning to integrate with banks, financial institutions, and potential international investors. However, important questions remain: where and how will the gold backing USDKG be stored? How will liquidity be ensured? How will global regulators respond? If the experiment is successful, other countries may follow Kyrgyzstan's example by launching tokens backed not only by gold but also by other assets (silver, oil, minerals). Consensys' audit confirms that USDKG is a serious project and not just another experiment. This makes it one of the most interesting examples of alternatives to CBDCs in the crypto industry.
Russia's laws and regulations regarding the crypto industry
Policy-level division and consensus: compliance, sovereignty, collaborative mechanisms. According to the current legal framework in Russia (as of early 2025): (Digital Financial Assets Law) (in effect since 2021) formally recognizes 'Digital Financial Assets' (DFA) as a legitimate form of property. Digital assets can be used for investments but not for daily goods and services transactions. However, the draft (Digital Currency Law) (not yet passed), initially allowed individuals and enterprises to 'use cryptocurrency in a limited manner,' but this draft has been shelved for years due to disagreements between the central bank and the Ministry of Finance. The Ministry of Finance tends to allow cryptocurrency for international settlements, while the central bank emphasizes risks and leans towards prohibition.
Policy discussions reveal a clear division—laws lag behind but practice has already commenced; regulation is undecided but companies are already taking action: current Russian laws do not recognize the legal payment status of stablecoins, allowing only foreign use; in practice, many companies are already using cryptocurrencies for cross-border settlements and asset transfers; policy suggestions focus on 'categorical regulation', i.e., distinguishing CBDCs, stablecoins, and crypto assets, clarifying their respective boundaries. According to Alexander Shendryuk-Zhidkov, deputy chairman of the Budget Committee of the Federation Council, who spoke at the exhibition, Russia plans to pilot crypto financial services in 'special administrative regions' such as Kaliningrad and Vladivostok, establishing local policy sandboxes to allow specific enterprises or projects to operate under regulatory exemptions and explore more flexibility.
New Models
The Central Bank of Russia, following the instructions of the President of Russia, submitted proposals to the government regarding the regulation of cryptocurrency (digital currency) investments. The proposal allows a limited scope of Russian investors to buy and sell cryptocurrencies. To this end, a three-year experimental legal regime (ELR) is planned. Only 'specially qualified' investors will be able to trade cryptocurrencies within the ELR. This is a new identity expected to be granted if citizens' investments in securities and deposits exceed 100 million rubles, or if their income in the previous year exceeds 50 million rubles. It is also proposed that companies qualifying under current legislation become participants in the experiment. For financial institutions wishing to invest in cryptocurrencies, the Central Bank of Russia will develop regulatory requirements based on the risk levels and nature of such assets.
The launch of ELR aims to enhance transparency in the cryptocurrency market, establish standards for service provision, and expand investment opportunities for experienced investors willing to take on greater risks. The Central Bank of Russia has repeatedly pointed out that private cryptocurrencies are issued or guaranteed by no jurisdiction, based on mathematical algorithms, and are highly volatile. Therefore, investors must be aware that they are taking on the risk of potential loss of funds when deciding to invest in cryptocurrencies.
The Central Bank of Russia still does not view cryptocurrency as a means of payment, proposing to prohibit residents from using cryptocurrency for transaction settlements outside the EPR and holding those who violate the ban accountable. Outside the experimental system, all qualified investors are expected to be allowed to invest in settlement derivatives, securities, and digital financial assets, which do not deliver cryptocurrency to investors but have returns linked to their value.
Russian exporters and importers will be allowed to use cryptocurrencies for cross-border settlements under foreign trade agreements, but only within the experimental legal regime (ELR). Additionally, the State Duma has passed laws allowing the use of foreign digital copyrights in Russia and Russian digital copyrights abroad. Furthermore, this will expand the mechanisms for using digital rights in foreign trade settlements.
The law also outlines the procedures and conditions for cryptocurrency mining and introduces relevant basic terms and definitions. According to the mining law that came into effect on November 24, 2021, individual entrepreneurs and legal entities registered in the special registry of the Federal Tax Service (FTS) can legally mine. Individuals can mine cryptocurrency without registration but must comply with energy consumption limits set by various regions. Reference material (cbr.ru/press/event)
Cross-border payments and international cooperation
Russia places great importance on cooperation with BRICS countries, advocating for the establishment of an independent clearing system through collaboration with BRICS nations. The Russian government has made it clear that the BRICS mechanism does not pursue a unified currency like 'BRICS Coin' but promotes multilateral mutual recognition and anchoring between national stablecoins and local digital assets, aiming to build a regional financial network that does not rely on the dollar but has circulation capabilities. Meanwhile, to avoid cross-border payment restrictions imposed by Western sanctions, Russian companies are setting up legal entities in 'friendly countries' like the UAE, issuing private blockchain stablecoins used only for specific trade and investment scenarios, bypassing the public market and Western regulatory scrutiny to build a more resilient and controllable digital payment network.
