This report is based on observations at the exhibition, conversations with officials, and in-depth data analysis of several local projects, restoring the cryptocurrency ecosystem taking shape in the CIS region and its ambition for "de-dollarization" in digital finance.
Written by: Joey Wu on Blockchain
At the end of March 2025, an inconspicuous cryptocurrency exhibition concluded in Moscow. The Crypto Summit was small enough to be "visited in ten minutes," yet unexpectedly gathered attention from government, industry, technology, and finance sectors: how can the CIS (Commonwealth of Independent States) region find paths for survival and breakthrough through stablecoins and blockchain technology under the financial blockade of war and sanctions?
This report is based on observations at the exhibition, conversations with officials, and in-depth data analysis of several local projects, restoring the cryptocurrency ecosystem taking shape in the CIS region and its ambition for "de-dollarization" in digital finance. The report will cover three parts: the exhibition situation, policy interpretation, and local CIS projects.
Heat in Seclusion: Observations from the Moscow Crypto Summit
The Crypto Summit was held on March 19-20 at the MTS LIVE HALL in Moscow, making it 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, including FBOX, Intelion, and MEXC. The agenda covered hot topics such as the 2025 cryptocurrency market outlook, Russian regulatory policies, BRICS digital assets, Web3 trends, mining, and investment, attracting several guests to speak, including Ivan Chebeskov, Deputy Minister of Finance of Russia, officials from the State Duma, representatives from the central bank, and CEOs of leading companies.
The scale of the exhibition was limited— the entire exhibition area could be visited in ten minutes— but it had a highly regional characteristic. The composition of exhibitors clearly reflected the current state of the CIS blockchain industry: 40% were mining machine vendors, all equipment was made in China, and Chinese manufacturers had formed a monopoly in the CIS mining market; 25% were cryptocurrency exchanges, including the locally prominent BingX and 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, specifically created for Russian companies to bypass international sanctions; 10% were KOLs and media, blockchain association organizations, while the rest were small project parties providing compliance services such as anti-money laundering.
The language environment, communication atmosphere, and crowd composition of the entire exhibition highlighted the extreme localization and seclusion of the CIS market: most exhibitors did not use English and had loose connections with the international crypto market. Crypto entrepreneurs were generally active in the Middle East, with Dubai becoming the center for Russian crypto entrepreneurs, while those who have long lived in the CIS region were rare. War, conscription, and regulatory pressure have created a "dual vacuum" of local talent loss and project flight.
However, the mining business was a major highlight. The Russian side showed an inclusive and even encouraging attitude towards mining at the policy level, with many Chinese exhibitors revealing that "mining machines sell particularly well in Russia," indicating that there is still significant hardware demand in this market.
The exhibition itself was small, but Russia placed great importance on it. Officials from the Ministry of Finance, the Ministry of Internal Affairs, parliament, and experts on BRICS digital economy cooperation participated in the exhibition, continuously speaking on-site and interpreting policies to set the tone for the future direction of cryptocurrency regulation in the CIS region.
Breaking Through in the Cracks of Sanctions: Interpretation of CIS Region's Crypto Policies
In the current context of heightened geopolitical tension and ongoing economic sanctions, Russia is gradually forming a cryptocurrency policy path with its own characteristics. The core of this policy system is to explore cross-border payment and financial sovereignty solutions that bypass the Western financial system, based on stablecoins and blockchain.
The conference released three major policy signals:
First, to incorporate crypto assets into the "de-dollarization" strategy and build local stablecoins; second, to improve relevant laws for gradual regulation and open special administrative zones for cryptocurrency compliance sandbox pilots; third, in terms of international cooperation, to strengthen collaboration with BRICS countries and develop a cross-border settlement framework of "multilateral anchoring and currency 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.
Local Stablecoins
Ruble-based Stablecoin A7A5
In February 2025, a company registered in Kyrgyzstan, Old Vector, launched a new stablecoin named A7A5, pegged to the Russian ruble at a 1:1 ratio. This digital asset aims to facilitate cross-border payments between Russia and other countries, especially in the context of current sanctions. The project team reported that the liquidity of the new stablecoin is provided by "real bank deposits with high overnight interest rates opened at reliable banks (PSB) with an agency network in Kyrgyzstan." Old Vector promised to release reserve reports weekly and undergo independent audits every six months.
Technical Features, 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 maintains agency relationships with financial institutions in Kyrgyzstan. Users can store A7A5 in decentralized wallets such as Trust Wallet and OKX Web3 Wallet, as well as in accounts on supported exchanges. To ensure security and compliance, the A7A5 smart contract includes functions to freeze (blacklist) and burn (BurnBlackFunds) tokens in certain wallets. Other stablecoin issuers (such as Tether) also use similar mechanisms to prevent illegal transactions and protect users.
On March 6, 2025, the Garantex exchange suspended its platform operations and trading due to the freezing of Tether (USDT) worth 2.5 billion rubles. In addition to asset freezes, the U.S. Secret Service, with the support of Europol and law enforcement in Germany and the Netherlands, also blocked the Garantex website. U.S. authorities accused the exchange of having ties to ransomware hackers and illegal dark web markets. The exchange stated, "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 suspend all services, including cryptocurrency withdrawals, while our entire team works to resolve this issue." Garantex claimed that the exchange is a leader in ruble liquidity, providing Russian users with unrestricted access to cryptocurrency. The platform supports ruble and any Russian bank card. According to Garantex, the USDT stablecoin is the most popular cryptocurrency among Russians. The trading volume of the ruble-USDT pair on the exchange far exceeds that of other cryptocurrency pairs. The platform team reminded everyone that all USDT tokens in wallets located in Russia may now be at risk.
On February 24, the European Union included the Russian cryptocurrency exchange Garantex in a new round of sanctions against Russia. This was the first time the EU imposed restrictions on a Russian cryptocurrency exchange. The platform has been under U.S. sanctions since April 2022.
The official statement on sanctions stated that Garantex has close ties with Russian banks that are under EU sanctions. Specifically, platform users can deposit and withdraw funds using cards from Sberbank of Russia, 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 freezing incident, being referred to as "the first case of self-rescue in the crypto market." (Report source: rbc.ru)
Passive Income Mechanism of A7A5
One of the unique features of A7A5 is its ability to generate passive income. According to the project white paper, 50% of the daily earnings from overnight deposits are distributed to stablecoin holders. Accumulation occurs automatically, requiring no additional action from users. Overnight deposits are a type of short-term bank deposit where funds are held overnight and returned the next day along with accrued interest. If deposited before a weekend or holiday, the deposit period will extend to the next business day, and interest will be calculated for the entire deposit period.
For example, the income of A7A5 stablecoin holders 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, with the only difference being that it uses an automatic mechanism to calculate interest for token holders, essentially functioning like a bank deposit.
"I am certainly very pleased that the concept of a crypto ruble we proposed a year and a half ago has received so much support and such solid implementation. Now, we can respond to the criticisms from the central bank and the financial supervisory authority. I hope people can purchase these tokens with fiat currency or, conversely, sell them for real rubles at any PSB branch," Mendeleev said.
Previously, sources from the Hash Telegraph publication reported that the American company Tether was actively adding wallet blacklists and blocking user access to the USDT stablecoin.
Availability of A7A5 on Exchanges
The cryptocurrency exchange Garantex announced that it has launched "the first security-regulated ruble stablecoin." The platform offers trading pairs of A7A5 with rubles and USDT. Additionally, the Bitpapa marketplace has opened up the possibility of trading crypto rubles, expanding the use cases of A7A5 across various trades. The issuer plans to release reserve reports weekly and conduct 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 tools, helping to simplify and accelerate international settlements for Russian enterprises. The combination of ruble pegging, passive income, and built-in security mechanisms makes A7A5 an attractive tool for companies engaged in foreign economic activities. Material reference (vc.ru)
Local Russian Exchange Garantex
This cryptocurrency exchange emerged in Estonia in 2019 but initially focused on the Russian market. One of the co-founders of the platform, Sergey Mendeleev, former mayor of the Yasenevo district in Moscow, stated that Garantex is an innovative cryptocurrency startup that provides customers with zero spread and zero commission services for exchanging fiat and cryptocurrencies. Mendeleev said in a 2019 interview, "We decided to temporarily create a non-commercial project, with the main goal of directly connecting sellers and buyers of cryptocurrency through an established average weighted exchange rate that benefits both parties."
Mendeleev's partner is Stanislav Drugalev, the founder of the custody 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 shares in Garantex to Irina Chernyavskaya. What he does now remains unknown. According to The Bell, another co-owner of the site may 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 U.S. authorities seized. Some media have linked Karavitsky to Russian intelligence agencies. It is alleged that he served as an economic security expert at VBRR Bank and Peresvet Bank, and was also the "security officer" of Garantex Bank. It is currently 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 call itself a platform that "does not comply with EU and U.S. sanctions against Russian users" and collaborates with everyone.
The exchange itself was sanctioned by the U.S. as early as spring 2022, but not for helping to evade sanctions: U.S. authorities suspected it of laundering over $100 million, involving Russia's largest dark web market, which was shut down by U.S. and German intelligence agencies in March 2022. Researchers from Chainalysis noted that the amount of suspicious transfers was even larger: $645 million was transferred between 2019 and 2021. 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 platform for ruble exchanges and withdrawals. Companies needing to pay for overseas supplies also began conducting cryptocurrency transactions through the platform.
In March 2024, U.S. and UK authorities began investigating $20 billion in transactions conducted through Garantex. In February 2025, the EU imposed sanctions on the platform for cooperating with sanctioned banks.
Kyrgyzstan's National Stablecoin
Gold Stablecoin Replaces CBDC
While many countries are developing central bank digital currencies (CBDCs), 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 (such as China's digital yuan and Russia's digital ruble), Kyrgyzstan is skeptical about CBDCs. The main arguments against them include: centralized control— the state would have complete oversight of citizens' transactions; privacy risks— users would lose financial independence; and limited benefits— state-owned digital currencies do not solve volatility issues. Instead, the authorities support the USDKG token, which is linked to the price of gold and operates according to the ERC-20 standard. The main advantages include: global availability— the asset can be used for international settlements; transparency— the token's flow is tracked on the blockchain; and stability— historically, gold has maintained its value better than many fiat currencies.
The audit of USDKG was conducted by Consensys Diligence, a team specializing in blockchain project security. During the inspection, the following aspects were examined: code correctness— ensuring that the smart contract operates as intended; security— preventing potential attacks and vulnerabilities; and alignment with project goals— whether the contract fully functions, including blacklisting, compliance, and other specified features. During the analysis, several medium and small vulnerabilities were identified, which the team quickly fixed: the transferFrom() function did not consider blacklisting, which could allow blocked users to transact. There was no verification of empty owners and compliance addresses, which could lead to management failures. After the fixes, Consensys confirmed the security of the USDKG smart contract, indicating that the project is ready for launch.
The structure of the USDKG token includes: owners— managing the issuance and destruction of tokens; compliance team— monitoring sanction lists and freezing assets when necessary; blacklisting— a mechanism to restrict suspicious wallets. Management is conducted using Gnosis Safe multi-signature, increasing the security level. 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 tool for preserving capital; transparency of fund flows— blockchain simplifies control and auditing; and reducing reliance on volatile cryptocurrencies— gold-backed assets are more stable.
What Are the Next Steps?
The USDKG project is about to officially launch. The authorities are planning to integrate with banks, financial institutions, and potential international investors. However, significant 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 lead, launching tokens backed not only by gold but also by other assets (silver, oil, minerals). The Consensys audit confirms that USDKG is a serious project, not just another experiment. This makes it one of the most interesting examples of a CBDC alternative in the crypto industry.
Russia's Laws and Regulations on the Crypto Industry
Division and Consensus at the Policy Level: Compliance, Sovereignty, Collaborative Mechanisms. According to Russia's current legal framework (as of early 2025): the "Digital Financial Assets Law" (implemented since 2021) formally recognizes "Digital Financial Assets" (DFA) as a legitimate form of property. Digital assets can be used for investment but cannot be used for everyday goods and services payments. However, the draft "Digital Currency Law" (not yet passed) initially allowed individuals and businesses to "use" cryptocurrencies in a limited manner, but the 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 cryptocurrencies for international settlements, while the central bank emphasizes risks and leans towards prohibition.
The policy discussions reveal a clear division— the law lags behind, but practice has already begun; regulation is undecided, but businesses are already taking action: current Russian law does not recognize stablecoins as a legitimate means of payment, only allowing their use abroad; in practice, many businesses are already using cryptocurrencies for cross-border settlements and asset transfers; policy recommendations focus on "categorical regulation," distinguishing between CBDCs, stablecoins, and crypto assets, clarifying their respective boundaries. According to Alexander Shendryuk-Zhidkov, Deputy Chairman of the Budget Committee of the Federation Council of Russia, at the exhibition, Russia plans to pilot crypto financial services in "special administrative zones" such as Kaliningrad and Vladivostok, building a local policy sandbox that allows specific businesses or projects to operate under regulatory exemptions, exploring more flexibility.
New Model
The Central Bank of Russia, following the President's directive, submitted proposals to the government to regulate cryptocurrency (digital currency) investments. The proposal allows a limited range 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 conduct cryptocurrency transactions within the ELR. This is a new identity, expected to be granted to citizens whose investments in securities and deposits exceed 100 million rubles or whose 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 Bank of Russia will establish regulatory requirements based on the risk level and nature of such assets.
The introduction of the ELR aims to increase the transparency of 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 not issued or guaranteed by any jurisdiction, are based on mathematical algorithms, and are highly volatile. Therefore, investors must be aware of the potential risk of loss of funds when deciding to invest in cryptocurrencies.
The Central Bank of Russia still does not view cryptocurrencies as a means of payment, thus proposing to simultaneously prohibit residents from using cryptocurrencies for transaction settlements outside the EPR and hold accountable those who violate the ban. Outside the experimental regime, all qualified investors will be allowed to invest in settlement derivatives, securities, and digital financial assets, which do not deliver cryptocurrencies to investors but whose returns are 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 a law 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 previously effective mining law as of November 24, individual entrepreneurs and legal entities registered in the special register of the Federal Tax Service (FTS) can legally mine. Individuals can mine cryptocurrencies without registration but must comply with energy consumption limits set by various regions. Material reference (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. Russian officials have clearly stated that the BRICS mechanism does not seek a unified currency like a "BRICS Coin," but rather promotes multilateral recognition and anchoring between national stablecoins and digital assets, aiming to build a regional financial network that does not rely on the dollar but has liquidity. At the same time, to circumvent the cross-border payment restrictions imposed by Western sanctions, Russian companies are establishing legal entities in "friendly countries" such as the UAE, issuing private chain stablecoins deployed solely for specific trade and investment scenarios, bypassing public markets and Western regulatory oversight, and building a more resilient and controllable digital payment network.
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