A7A5 Stablecoin Director Denies Breaking Compliance Laws

Ogienko asserted that A7A5 operates legally within its jurisdiction of Kyrgyzstan and in the markets it serves, even as affiliates face restrictions from the United States. The company’s services have grown in response to sanctions imposed by the U.S. Department of the Treasury, particularly those affecting Russian financial institutions like Promsvyazbank (PSB).

Despite the controversy, Ogienko emphasized a focus on commerce over politics. We’re not politicians. We are traders. We are businessmen, he stated, adding, We’re open for business cooperation with any country. This stance was tested at the Token2049 conference in Singapore, where A7A5 was a sponsor via its registered entity, BOB Group. Following concerns from other sponsors, references to A7A5 were reportedly removed from event materials.

A7A5 provides a financial channel for Russian clients to conduct cross-border payments and access liquidity from market-leading stablecoins like USDT through decentralized finance (DeFi) protocols. This model allows users to interact with the broader crypto market without directly holding U.S. dollar-backed stablecoins, navigating around certain financial blockades.

According to the company’s own dashboard, this strategy has fueled significant expansion. A7A5 reportedly added nearly $90 billion in circulating supply last year, a growth rate that the source material notes was faster than that of major stablecoins USDT or USDC during the same period. This growth highlights a demand for financial services that operate outside the traditional, U.S. dollar-denominated banking system.

The primary driver for A7A5’s business model and subsequent growth is the imposition of international sanctions against Russia. By barring institutions from the U.S. dollar financial system, these restrictions created a vacuum for alternative payment rails. Ogienko claims A7A5 is not committing a crime in its home base of Kyrgyzstan or in Russia by providing these services.

The company leverages its position in jurisdictions that have not imposed similar sanctions on Russia. However, the legal and reputational risks are notable, as evidenced by the sponsor issue at Token2049, which illustrates the broader market’s sensitivity to associations with sanctioned entities.

Several key details remain unclear. The specific timeframe for the cited $90 billion growth in circulating supply is not provided beyond “last year.” Furthermore, the status of Russia’s pending stablecoin regulations is still developing, and the full extent of A7A5’s “consultative” relationship with Russian authorities has not been detailed. The names of the other sponsors at Token2049 who raised concerns about A7A5’s presence were also not disclosed.

Ogienko expressed significant ambitions for A7A5’s future, stating a goal to capture a substantial portion of Russia’s international trade settlements. We think that we can make the trade volumes settled in A7A5 grow … we hope that we can do more than 20% of Russia’s trade settlements with different countries in A7A5, he said. The company is reportedly in communication with Russian authorities regarding the development of blockchain regulation and financial infrastructure, though Ogienko maintains this is consultative and not a matter of direct government control.

For individuals and businesses interacting with digital assets, especially those with complex geopolitical ties, it is crucial to remain vigilant. General best practices include:

• Verifying the regulatory status and licensing of any stablecoin issuer within your own jurisdiction.
• Understanding the counterparty risks associated with platforms that service users in heavily sanctioned regions.
• Conducting thorough due diligence on a stablecoin’s reserve assets and compliance frameworks before transacting.
• Staying informed on evolving international sanctions lists and their implications for the cryptocurrency industry.