Russia's Crypto Market Insight: Mining Machines Selling Like Hotcakes

By Joey from Wu Blockchain

At the end of March 2025, a seemingly insignificant cryptocurrency exhibition in Moscow, Crypto Summit, which is so small that it can be completed in ten minutes, unexpectedly brought together government, industry, technology and finance to focus on how the CIS region can survive and break out through stablecoin and blockchain technology, in the midst of a financial embargo of wars and sanctions. How can the CIS (Commonwealth of Independent States) region find a way to survive and break out of the financial embargo with the help of stable coins and blockchain technology?

Based on on-site observations, conversations with officials, and in-depth information on several local projects, this report restores the emerging cryptocurrency ecosystem in CIS and its ambition to “de-dollarize” digital finance. The report will start from the exhibition, policy interpretation and CIS local projects.

I. Heat in the Closure: Observations from the Crypto Summit Exhibition in Moscow

Crypto Summit, held on March 19–20 at MTS LIVE HALL in Moscow, is the most important annual crypto industry event in Russia. The event was organized by BingX, with Algorithm as the lead partner, and brought together many leading Russian and Chinese companies, including FBOX, Intelion, MEXC, etc. The agenda covers hot topics such as 2025 crypto market outlook, Russian regulatory policies, BRICS digital assets, Web3 trends, mining and investment, etc. It attracted a number of guest speakers, including Ivan Chebeskov, Deputy Minister of Finance, officials from the State Duma, representatives from the Central Bank and CEOs of leading companies.

The show is limited in size — the entire exhibition area can be explored in ten minutes — but highly regional in character. The composition of the exhibitors clearly maps the reality of the CIS blockchain industry: 40% are mining machine vendors, all equipment is made in China, and Chinese manufacturers have formed a monopoly in the CIS mining market; 25% are crypto exchanges, including BingX and MEXC, which have outstanding performance locally, Bitget, which is a small-scale exhibitor, as well as the local CEX platforms, Keine and Rapira; and DEX platforms include Storm, which is based on TON, and Rapira, which is based on the CIS. DEX platforms include TON-based Storm and Alpha DEX, which focuses on Meme coins; 15% are cross-border payment and asset transfer service providers, which are designed for Russian companies to bypass international sanctions; 10% are KOLs and media outlets, blockchain associations and organizations, and the rest are small-scale projects that provide anti-money laundering and other compliance services.

The language environment, networking atmosphere and crowd composition throughout the show highlighted the extremely localized and closed nature of the CIS market: most exhibitors did not use English and were loosely connected to the international crypto market. Crypto entrepreneurs are generally active in the Middle East, with Dubai becoming a center for Russian crypto entrepreneurs, and very few crypto entrepreneurs living permanently in the CIS region. War, military conscription, and regulatory pressure have created a “double vacuum” of local brain drain and project flight.

However, the mining business is a bright spot. Russia has shown a tolerant and even encouraging attitude towards mining at the policy level, and many Chinese exhibitors revealed that “mining machines sell very well in Russia”, indicating that there is still a large demand for hardware in the market.

The scale of the exhibition itself is small, but Russia attaches great importance to this exhibition. Officials from the Russian Ministry of Finance, Ministry of Internal Affairs, Parliament and experts from the BRICS Digital Economy Cooperation all participated in the show, and they continued to speak on-site, explaining policies and setting the tone for the future direction of crypto regulation in the CIS zone.

II. Breaking through the Sanctions Cracks: Interpreting Encryption Policy in the CIS Zone

Against the backdrop of the current high geopolitical tensions and continued increase in economic sanctions, Russia is gradually forming a set of cryptocurrency policy paths 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 stable coins and blockchain. The meeting released three major policy signals: 1. to include crypto assets in the “de-dollarization” strategy and build a local stablecoin; 2. to improve the relevant laws and gradually regulate them, and open up special administrative zones to conduct cryptocurrency compliance sandbox pilots; and 3. to strengthen cooperation with the BRICS countries and develop a “Multilateral Anchoring and Blockchain” system under the BRICS mechanism in terms of international cooperation. Strengthen cooperation with BRICS countries and develop a cross-border settlement framework under the BRICS mechanism with “multilateral anchoring and mutual recognition of currencies”. Overall, Russia’s crypto policy is gradually shifting from a defensive response to a strategic deployment, emphasizing the reconstruction of financial sovereignty and global settlement capacity through digital technology under the pressure of sanctions.

I. Local stablecoins

● Ruble-based stablecoin A7A5

In February 2025, Old Vector, a company registered in Kyrgyzstan, launched a new stablecoin called A7A5, which is pegged to the Russian ruble at a 1:1 ratio. The digital asset is designed to facilitate cross-border payments between Russia and other countries, especially in the context of the current sanctions. The project team reports that the new stablecoin’s liquidity is provided by “real bank deposits with high overnight interest rates opened in reliable banks (PSBs) that have a correspondent network with Kyrgyzstan.” Old Vector has committed to publishing weekly reserve reports and undergoing independent audits every six months.

Technical characteristics, security and operating environment of A7A5

A7A5 is published on the Ether (ERC-20 standard) and Wavefield (TRC-20 standard) blockchains, ensuring broad compatibility and ease of use. Liquidity for the stablecoin is provided by ruble deposits held at the Russian Industrial Bank (PSB), which maintains correspondent relationships with financial institutions in Kyrgyzstan. Users can store A7A5 in decentralized wallets such as Trust Wallet and OKX Web3 Wallet, as well as accounts on supported exchanges. To ensure security and compliance, the A7A5 smart contract has built-in functionality to freeze (blacklist) and burn (BurnBlackFunds) tokens in certain wallets. Other stablecoin issuers (e.g. Tether) use similar mechanisms to prevent illegal transactions and protect users.

On March 6, 2025, the Garantex exchange suspended operations and trading on its platform due to the freezing of RUB 2.5 billion worth of Tether (USDT). In addition to the asset freeze, the U.S. Secret Service blocked the Garantex website with the support of Europol and law enforcement officials from Germany and the Netherlands. U.S. authorities have accused the exchange of having links to ransom hackers and illegal markets on the dark web. In a statement, the exchange said, “We have bad news. tether has joined the war on the Russian cryptocurrency market and has 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 the issue. “Garantex said that the exchange is a leader in ruble liquidity, offering Russian users unrestricted access to cryptocurrencies. The platform supports rubles 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’s team drew attention to the fact that all USDT tokens located in Russian wallets may now be under threat.

On February 24, the European Union included Russian cryptocurrency exchange Garantex in a new round of sanctions against Russia. This is the first time the EU has imposed restrictions on a Russian cryptocurrency exchange. The platform has been under U.S. sanctions since April 2022.

The official statement on the sanctions says that Garantex has close ties to Russian banks that are sanctioned by the EU. Specifically, platform users can deposit and withdraw funds using cards from Sberbank of Russia, T-Bank (formerly tinkoff Bank) and Alfa Bank, which have been sanctioned under European legislation. The ruble-based stablecoin A7A5 has been called “the first crypto market self-help case” after successfully responding to the Garantex exchange freeze. (Reporting from rbc.ru)

Passive income mechanism A7A5

One of the unique features of A7A5 is the ability to generate passive income. According to the project whitepaper, 50% of the daily earnings from overnight deposits are distributed to stablecoin holders. Accumulation occurs automatically and requires no additional action on the part of the user. Overnight deposits are short-term bank deposits in which 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 business day and interest is accrued for the entire deposit period.

In the case of the A7A5 stablecoin, the holder’s income is generated by placing reserve funds on overnight deposits, which provides a 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 a mechanism that automatically calculates interest for the owner of the token. The only difference is that it uses a mechanism that automatically calculates interest for the token owner, essentially acting as a bank deposit.

“I’m certainly pleased that the crypto-ruble concept we proposed a year and a half ago has gained so much support and such solid implementation. Now we can respond to the criticism of the Central Bank and the Financial Supervisory Authority. I hope that people will be able to buy these tokens in legal tender or, conversely, sell them in real rubles at any PSB branch,” Mendeleev said.

Earlier, sources in the Hash Telegraph publication reported that the U.S. company Tether is actively adding wallet blacklists and blocking users from accessing the USDT stablecoin.

A7A5 Availability on the Exchange

Cryptocurrency exchange Garantex has announced the launch of the “first security-regulated ruble stablecoin”. The platform offers pair trading of A7A5 with Rubles and USDT. In addition, the Bitpapa marketplace opens up the possibility of trading crypto-Roubles, which expands the use cases of A7A5 in various transactions. The issuer plans to publish weekly reserve reports 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 instruments that will help simplify and speed up international settlements for Russian businesses. 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)

● Russia’s local exchange garantex

The cryptocurrency exchange emerged in Estonia in 2019, but initially focused on the Russian market. Sergey Mendeleev, one of the platform’s co-founders and a former governor of Moscow’s Yasenevo district, describes Garantex as a cryptocurrency startup with an innovative idea to provide customers with a zero-pip, zero-commission exchange of fiat currencies with cryptocurrencies. In a 2019 interview, Mendeleev said, “We decided to make a non-commercial project for the time being, whose main goal is to directly connect sellers and buyers of cryptocurrencies through an established average weighted exchange rate that is beneficial for both parties.”

Mendeleev’s partner is Stanislav Dlugarev, founder of escrow provider Caravan-Telecom. Under their leadership, the exchange operated for two years.2021 In February, Drugarev died in a car accident in Dubai. A month later, Mendeleev sold his stake in Garantex to Irina Chernyavskaya. It remains to be seen what he did. According to The Bell, another co-owner of the site may be Alexander Ntifo-Siao, who is still listed by the U.S. Department of Justice as one of the beneficiaries of the exchange, but under a different name: Alexander Mira Cerda. In December 2021, he became one of the beneficiaries of the exchange, along with partner Pavel Karavitsky. Pavel Karavitsky) became co-owners of the Russian legal entity FinTech, the owner of the garantex.academy domain seized by the US authorities. Some media outlets have linked Karavitsky to Russian intelligence. He is said to have worked as an economic security expert at VBRR Bank and Peresvet Bank, as well as a “security officer” at Garantex Bank. It is unclear who owns the cryptocurrency exchange.

What is garantex cryptocurrency trading known for?

After the international payment system left Russia and banks were banned from making cross-border transfers, Garantex started to call itself a platform that “does not comply with EU and US sanctions against Russian users” and cooperates with everyone.

The exchange itself was sanctioned by the US as early as the spring of 2022, but not for helping to circumvent sanctions: US authorities suspected it of laundering more than $100 million in connection with Russia’s largest dark web marketplace, which was shut down by US and German intelligence agencies in March 2022. researchers at Chainalysis noted that the amount of suspicious transfers was even larger: $645 million for the period 2019–2021 Chainalysis researchers note that the amount of suspicious transfers is even larger: $645 million between 2019 and 2021. However, the sanctions have not stopped the growth of the exchange. Market participants told The Bell that Garantex became the largest ruble exchange and withdrawal platform after Coin exited the Russian market. Businesses that needed to pay for supplies from overseas also began trading cryptocurrencies through the platform.

In March 2024, U.S. and U.K. 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 National Stabilization Coin

While many countries are developing central bank digital currencies (CBDC), Kyrgyzstan has chosen a different path. Instead of creating a national digital currency, the authorities decided to back the gold-backed stablecoin USDKG, which was recently audited by Consensys Diligence, a team known for its work on MetaMask and other blockchain solutions. The audit confirmed the security of USDKG’s smart contracts, bringing it closer to full go-live.

Why did Kyrgyzstan abandon the CBDC?

Unlike countries developing digital currencies (China’s digital yuan, Russia’s digital ruble), Kyrgyzstan is skeptical about CBDC. The main arguments against it: centralized control — the state will have full control over citizens’ transactions; privacy risk — users lose financial independence; limited benefits — state-owned digital currencies do not solve the volatility problem. Instead, the authorities support the USDKG token, which is pegged to the price of gold and operates according to the ERC-20 standard. Key benefits: global availability — the asset can be used for international settlements; transparency — the movement of tokens is tracked in the blockchain; stability — historically, gold has held its value better than many fiat currencies. holding power better than many fiat currencies.

The USDKG audit was conducted by Consensys Diligence, a team specializing in blockchain project security. The following were examined during the inspection: code correctness — ensuring that the smart contract works as specified. Security — guarding against potential attacks and vulnerabilities. Compliance with project goals — whether the contract is fully functional, including blacklisting, compliance and other required features. During the analysis, several medium and small vulnerabilities were identified, which the team quickly fixed: the transferFrom() function did not take into account blacklists, which could allow blocked users to transact. There was no validation of empty owners and compliant addresses, which could lead to administrative failures. With this fix, Consensys has confirmed the security of the USDKG smart contract, making the project ready for launch.

The USDKG token structure includes: Owner — manages token issuance and destruction. Compliance team — monitors the sanction list and freezes assets if necessary. Blacklisting is a mechanism to restrict suspicious wallets. Managed with Gnosis Safe multi-signatures for an added level of security. Consensys recommends updating the security version regularly to avoid potential vulnerabilities.

Why is Kyrgyzstan betting on gold?

Kyrgyzstan is rich in gold reserves and converting gold into digital assets could bring economic benefits. Potential benefits: attracting foreign capital — gold remains a popular vehicle for preserving capital. Transparency of capital flows — Blockchain simplifies control and auditing. Reduced reliance on volatile cryptocurrencies — gold-backed assets are more stable.

What’s next?

The USDKG project is about to be officially launched. The authorities are planning to integrate with banks, financial institutions and possibly international investors. However, important questions remain: where and how will the gold backing the USDKG be stored? How will liquidity be ensured? How will global regulators react? If the experiment is successful, other countries may follow Kyrgyzstan’s lead and launch 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 CBDC alternatives in the crypto industry.

II. Russian Law and Regulation of the Encryption Industry

Divisions and consensus at the policy level: compliance, sovereignty, synergies. According to the current Russian legal framework (as of early 2025): the Law on Digital Financial Assets (in force since 2021) officially recognizes “digital financial assets” (DFA) as a legal form of property. Digital assets can be used for investment, but not for payment for everyday goods and services. However, the draft Digital Currency Law (yet to be passed), which in its initial version allowed for the “limited use” of cryptocurrencies by individuals and businesses, has been on hold for years due to disagreements between the Central Bank and the Ministry of Finance. The finance ministry prefers to allow cryptocurrencies to be used for international settlements; the central bank emphasizes the risks and prefers to ban them.

There is a clear split in the policy debate — the law is lagging but practice is already underway, regulation is pending but companies are already acting: current Russian law does not recognize stablecoin as a legal payment and only allows for offshore use; in practice a large number of companies are already using cryptocurrencies for cross-border settlements and asset transfers; and the policy recommendations are focused on “Categorical regulation”, i.e., distinguishing between CBDC, stablecoins, and crypto assets, and clarifying the boundaries of each. According to Alexander Shendryuk Zhidkov, Deputy Chairman of the Budget Committee of the Russian Federation Council, who spoke at the show, Russia plans to pilot crypto-financial operations in “special administrative regions” such as Kaliningrad and Vladivostok, to build a policy sandbox at the local level, to allow specific businesses or projects to operate under regulatory exemptions, and to explore more flexibility. More flexibility is being explored.

● A new paradigm

The Central Bank of Russia (CBR), on the instructions of the President of Russia, has submitted proposals to the government on regulating investments in cryptocurrencies (digital currencies). It is proposed to allow a limited range of Russian investors to buy and sell cryptocurrencies. For this purpose, it is planned to establish a three-year specialized experimental legal regime (ELR). Only “specially qualified” investors will be able to trade in cryptocurrencies within the ELR. This is a new status, which is expected to be granted to citizens who have invested more than 100 million rubles in securities and deposits, or whose income for the previous year exceeded 50 million rubles. It is also proposed that investor companies that qualify under current legislation become participants in the experiment. For financial institutions wishing to invest in cryptocurrencies, the Bank of Russia will set regulatory requirements based on the level of risk and nature of such assets.

The introduction of the ELR is aimed at increasing transparency in the cryptocurrency market, forming standards for service provision, and expanding investment opportunities for experienced investors who are prepared to take on greater risks. The RBI has repeatedly noted that private cryptocurrencies are not issued or guaranteed by any jurisdiction, are based on mathematical algorithms, and are highly volatile. Therefore, when deciding to invest in cryptocurrencies, investors must realize that they are taking the risk of potential loss of funds.

The Central Bank of Russia still does not consider cryptocurrencies as a means of payment and therefore proposes to simultaneously prohibit residents from using cryptocurrencies to settle transactions outside of the EPR and hold them accountable for violating the ban. Outside of the experimental regime, the plan is to allow all qualified investors to invest in cleared derivatives, securities, and digital financial assets that do not deliver cryptocurrency to the investor, but whose returns are linked to its value.

Russian exporters and importers will be allowed to use cryptocurrencies in cross-border settlements under foreign trade agreements, but only within the Experimental Legal Regime (ELR). In addition, the State Duma has passed laws allowing the use of foreign digital rights in Russia and the use of Russian digital rights abroad. In addition to this, this will expand the mechanisms for the use of digital rights in the settlement of foreign trade.

The law also regulates the procedure and conditions for cryptocurrency mining and introduces the relevant basic terms and definitions. According to the mining law, which previously came into force on 24.11.1, individual entrepreneurs and legal entities registered in the special registry of the Federal Tax Service (FTS) can legally conduct mining. Individuals are not required to register to mine cryptocurrencies, subject to energy consumption limits set by the regions.

Material reference (cbr.ru/press/event)

III. Cross-border payments and international cooperation

Russia attaches great importance to cooperation with BRICS countries and advocates the establishment of an independent clearing system through cooperation with BRICS countries. Russian officials made it clear that the BRICS mechanism does not pursue the “BRICS Coin” type of unified currency, but to promote multilateral mutual recognition and anchoring between the stable currency and local currency digital assets of various countries, with the goal of building a regional financial network that does not rely on the U.S. dollar but has the ability to circulate. At the same time, in order to circumvent the restrictions on cross-border payments brought about by Western sanctions, Russian enterprises are building a more flexible and controllable digital payment network by setting up legal entities in “friendly countries” such as the United Arab Emirates, issuing and deploying private-chain stable coins that are only used in specific trade and investment scenarios, bypassing the open market and European and American regulations.