Russia Legalizes Crypto Mining to Aid Sanctions Evasion - What It Means

• By JayKay Sun
• 13 Mar, 2025
• 20 Comments

On October 2, 2025, Russia crypto mining was officially legalized, a move aimed at bolstering the country's ability to sidestep Western financial restrictions. The decision flips a decade‑long policy of tight control and signals a new era where digital assets become tools of economic warfare.

TL;DR

• Legalizing crypto mining gives Russia a state‑backed way to generate ruble‑linked digital assets.
• The A7A5 stablecoin, backed by Old Vector, has already moved over $51billion.
• Sanctioned exchanges Garantex and Grinex are the main trading hubs.
• US Treasury OFAC and UK OFSI have responded with coordinated sanctions targeting the ecosystem.
• While crypto offers a new payment rail, its market size and traceability limit its impact.

Why Russia Shifted Its Crypto Policy

Russia is a major energy exporter that saw its access to SWIFT and dollar markets shrink after the February 2022 invasion of Ukraine. The resulting financial chokehold forced Moscow to explore alternatives that could keep trade flowing without western approval.

Early attempts focused on offshore bank networks and barter deals, but those channels proved vulnerable to swift sanctions. By 2023, a covert team of state‑linked technocrats began drafting a roadmap for a "digital sovereign finance" system. The roadmap emphasized three pillars: crypto mining, a ruble‑backed stablecoin, and a limited set of compliant exchanges.

The legal shift in 2025 formalizes that roadmap, turning a previously underground operation into a state‑sanctioned industry. Authorities now issue licences to mining farms in Siberia and the Urals, allowing them to sell electricity at subsidised rates and to convert the generated coins directly into rubles.

How the New Legal Framework Works

Under the new decree, crypto mining companies must register with the Ministry of Digital Development. Registration grants them three key benefits:

1. Access to state‑owned power grids at reduced tariffs.
2. Legal permission to convert mined tokens into rubles without tax penalties.
3. Eligibility to partner with licensed crypto‑payment processors for cross‑border transactions.

The decree also legitimises the use of stablecoins for international trade, provided the token is backed by a Russian‑controlled reserve. That clause is the legal basis for the A7A5 stablecoin, which claims a 1:1 ruble peg.

Key Players in the Shadow Crypto Economy

A7A5 stablecoin is a ruble‑backed token launched in February 2025 by Old Vector, a Kyrgyzstan‑registered firm owned by Russia's state‑bank Promsvyazbank. In its first four months, A7A5 processed about $9.3billion, and by July 2025 total volume topped $51.17billion.

The token primarily trades on two exchanges:

• Garantex, a platform sanctioned by the US in 2022 but still operating within a narrow Russian‑centric ecosystem.
• Grinex, founded by former Garantex staff in 2024 specifically to evade sanctions; the US added it to its blacklist in August 2025.

Both exchanges offer fiat‑off‑ramps that let users buy A7A5 with PSB bank cards, effectively bridging the on‑chain world with the Russian banking system.

Western Countermeasures

The rapid legitimisation prompted a coordinated response from Washington and London. On August 20, 2025, the US Treasury's Office of Foreign Assets Control (OFAC) designated several crypto‑mining firms as sanction‑evasion enablers - the first time a virtual‑currency mining company faced direct Treasury action.

Simultaneously, the UK's Office of Financial Sanctions Implementation (OFSI) sanctioned Old Vector, Grinex, and related Kyrgyz entities. The UK also froze assets belonging to eight individuals tied to the A7A5 network.

These designations target not just the tokens but the entire support chain: payment processors, Kyrgyz banks used for military procurement, and even logistics firms that move mining hardware across borders.

Effectiveness and Limits of Crypto for Evasion

Analysts agree that crypto offers a novel payment rail, but its scale remains modest. The Bitcoin Policy Institute notes that Russia's annual pre‑war export volume (~$400billion) dwarfs Bitcoin’s market cap, making large‑scale commodity trades via Bitcoin impractical. Volatility further discourages merchants from pricing goods in crypto.

Chainalysis calls Russia’s network a “shadow crypto economy”, highlighting its ability to move billions quickly and with plausible deniability. However, the same blockchain transparency that enables rapid transfers also furnishes investigators with immutable transaction trails. Sanctioned entities have been linked to specific wallet clusters, allowing OFAC and OFSI to freeze assets and issue “no‑travel” orders for key operators.

In practice, the A7A5 stablecoin’s ruble peg and limited trading venues keep the ecosystem relatively closed. That closed nature reduces exposure to price swings but also makes it easier for authorities to monitor the few entry points.

Future Outlook

Russia now boasts the world’s third‑largest crypto‑mining capacity, an asset that could fund future defense spending if sanctions tighten further. The legal framework also paves the way for new tokenised services, such as state‑backed utility payments and potentially a sovereign digital ruble.

Western regulators are likely to expand their crypto‑sanctions toolkit, employing advanced analytics, mandatory reporting for exchanges, and stricter secondary‑sanction rules. Meanwhile, Russian lawmakers may explore refinements to the mining licence regime, possibly introducing tiered tax incentives for farms that process a certain share of domestic electricity.

For businesses operating in or with Russia, the key takeaway is heightened risk: any involvement with A7A5, Garantex, or Grinex now carries compliance red flags. Companies should audit their crypto‑exposure, consider alternative settlement methods, and stay abreast of evolving sanction lists.

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