From Small Wars Journal, May 1:
On March 10, 2026, Central Bank of Russia’s Governor Elvira Nabiullina announced that the digital ruble was on-track to launch in September 2026. Since initial pilot testing in mid-2023, Russia’s central bank digital currency (CBDC) has often been thought of as a potential tool to counter Western sanctions, with this being even more important due to increased sanctions resulting from Russia’s full-scale invasion of Ukraine.
Despite these initial assumptions from both policymakers and analysts, these developments within Russia’s digital asset ecosystem suggest a different reality, especially due to the potential of secondary sanctions issued by the U.S. against China, which is Russia’s largest trading partner and ostensible economic lifeline. Privately-issued stablecoins like the A7A5 stablecoin have emerged as the more immediate tool for enabling Russian cross-border transactions and sanctions evasion.
This utilization of stablecoins demonstrates how financial infrastructure has become a critically contested domain within irregular warfare’s purview. The growing use of stablecoins by sanctioned actors reflects a broader transition to decentralized financial networks, with this enabling military operations and gray-zone activities while circumventing traditional instruments of economic pressure like sanctions.
Stablecoins
When discussing the use of cryptocurrencies in strategic competition, one must first understand the difference between the term “cryptocurrencies” in eponymous culture and stablecoins.Technically, stablecoins are a digital asset that falls under the category of being a cryptocurrency. However, in popular culture, cryptocurrencies and stablecoins are often seen as fundamentally independent entities. When referring to cryptocurrencies, most individuals are often referring to digital assets like Bitcoin and Ethereum, with these very volatile assets serving as a decentralized store of value. In contrast, stablecoins are price-stable digital assets that have a one-to-one peg to fiat currencies like the U.S. dollar, Euro, or yen. Stablecoins are also typically issued by private, non-state entities.
In contrast to both cryptocurrencies and stablecoins, CBDCs are state-issued digital currencies that are managed directly by their associated nations’ central banks/monetary authorities, with two examples being the digital euro and the digital yuan (e-CNY). Due to their entire lifecycle being directly managed by the country’s main financial authority, CBDCs are often thought of as a tool of government surveillance and control.
With these definitions in mind, stablecoins, not CBDCs, have increasingly emerged as a practical tool for conducting cross-border transitions in sanctions-constrained environments. In this context, these financial instruments can help threat actors evade detection and support sustained operations even under sanctions pressure.
Sanctions evasion via the A7A5 stablecoin
Sanctions evasion has been a core tenet of the Russian payments industry, with the U.S. sanctioning 13 firms in early 2024 for enabling digital payments for the purposes of “enabling potential sanctions evasion,” with some of these actors specifically leveraging blockchain-based payments or virtual currencies to do so.The A7A5 stablecoin, which is issued on both the Ethereum and TRON blockchains, was ostensibly created to enable further sanctions evasion. Launched in January 2025 in Kyrgyzstan by A7 LLC, the A7A5 stablecoin made history by being the first stablecoin pegged to the Russian ruble. Since that time, A7A5 has processed over $72b in volume.
A7 LLC itself is majority owned by Ilan Shor, a Moldovan political figure and oligarch who was previously sentenced for stealing $1b from Moldova’s banking system in a money laundering scheme in 2014. Shor was sanctioned by the U.S. in late 2022 and described as an “instrument of Russia’s global influence campaign.” A7’s minority owner is Promsvyazbank (PSB), a Russian state-owned enterprise (SOE) bank that was itself sanctioned in early 2022 for its role in acting as the key lender for Russia’s defense industry....
....MUCH MORE
