In a commentary for the Vzglyad media, Antonina Levashenko, Head of the Gaidar Institute's International Best Practices Analysis Department, assessed the potential impact of the forthcoming EU sanctions in respect of the A7A5 ruble stablecoin used by Russia in foreign trade operations to bypass restrictions.
A7A5 is a stablecoin which value is pegged to the ruble at a ratio of 1:1. According to the expert, its key advantage is that in Russia the token is approved for foreign trade settlements as a "digital financial asset" (DFA). "This means that technically they can settle accounts with foreign counterparties in the absence of access to SWIFT or correspondent accounts in US dollars," Antonina Levashenko noted.
Assessing the likely consequences of EU sanctions, which, according to Bloomberg, may include a ban on any participation of European entities in transactions with A7A5 stablecoin, the expert noted the risks. "This may lead to a decrease in the number of foreign counterparties from the EU and a fall in demand and, consequently, the liquidity of A7A5," Antonina Levashenko said.
At the same time, Antonina Levashenko reminded that sanctions do not make the token itself useless. "In terms of sanctions, they can be imposed on a specific exchange or company, but the token itself can technically be traded beyond the site. The sanctions will still affect the operation of the platform, but they will not make the tokens unusable for settlements," the expert noted.
As for the future of such instruments, Antonina Levashenko believes that Russia can make progress in this area. "It makes sense to issue digital financial assets whose value is tied to “safe” assets with low volatility and to assets that can be quickly converted into fiat currencies," the expert said. According to Antonina Levashenko, "the most effective way to combat sanctions today would be to legalize the use by Russian residents of digital currencies in international settlements. This would give foreign trade participants access to numerous tokens on the global market, the use of which by Russian companies is hard to be tracked by unfriendly countries’ authorities”.