The World Beyond SWIFT: Russia and the Crypto Underground Economy

2025-12-06 19:26

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In a country under siege by the Western financial system, the term "Stablecoin," which originally only appeared in Silicon Valley whitepapers, has quietly evolved into essential infrastructure relied upon by ordinary people and businesses.

Original Article Title: "Beyond SWIFT: Russia and the Cryptic Underground Economy"

Original Article Author: Anita（X: @Anitahityou）

Moscow's winter mornings always arrive slowly. The metro glides from the grey residential areas into the city center, with the carriage's advertising screens scrolling through the usual content of Ruble loans, online shopping promotions, and a seemingly normal banner: "Settling Overseas Income? USDT Accepted." It's hard to imagine that in a country surrounded by the Western financial system, the term "stablecoin," originally found only in Silicon Valley whitepapers, has quietly become the infrastructure on which ordinary people and businesses rely.

Alexei (pseudonym), 34, claims to "do IT consulting," but his true identity is a small node on Moscow's stablecoin black market chain. His workday starts at 9 a.m. with checking Telegram channels. His phone displays four or five groups: "Moscow USDT Insider Rate," "Freelancer Settlement Channel," "Ruble Cash Exchange / Card-to-Card · Trusted Parties Only."

Each group has bots offering rates — "Buying USDT at 76.3, Selling at 77.1," and beneath that, there are dozens of private chats. There are young freelancers looking to convert dollars received from clients into USDT and then into Rubles, small companies importing parts needing to pay a Turkish supplier in USDT, and foreign numbers with accents just saying, "Large amount, meet in person."

Alexei's profit strategy is simple. He earns a small spread from small transactions or charges a fraction of a percent as a "fee" for large orders, with larger exchanges or trading platforms behind him.

All of this may seem like simple "currency exchange," but the funds quickly flow into deeper dark currents.

Some deposit USDT into local exchanges with Russian-friendly interfaces and then convert it to Bitcoin to transfer out. Others use Russian platforms like Garantex to launder funds into offshore accounts, while some use it to provide liquidity to companies in Georgia or the UAE.

By evening, he splits the USDT he earned into two parts. One part is sold for Rubles to pay the mortgage and buy groceries, while the other part quietly rests in a multi-signature wallet, waiting for the day the situation changes, perhaps serving as the last line of defense at home.

In the statistics, he's just a tiny blip in the "Russian Retail Crypto Inflow."

But all these points connected by a line form that invisible market.

1. After being cut off, new blood vessels grow underground

Russia's crypto story didn't start after sanctions were imposed.

In 2020, Eastern Europe was already one of the global "regions with the highest volume of crypto transactions related to crime." Chainalysis research showed that the darknet received a record $1.7 billion in cryptocurrency that year, with the majority flowing to one name: Hydra. Hydra is the largest darknet market to date, accounting for 75% of the global darknet market's revenue at its peak.

Before being shut down by German police in April 2022, it was actually a massive "dark economic center" — drugs, counterfeit documents, money laundering services, biometric data, all "transactions not recognized by the official world," settled in stablecoins.

The fall of Hydra did not make this chain disappear, only made the shadow re-disperse: its users, infrastructure, intermediary networks later reorganized between Garantex, Telegram OTC, and small trading platforms.

The dark side of Russia's crypto economy did not emerge after sanctions; it has a deep historical foundation.

Since the outbreak of the 2022 Russo-Ukrainian War and the comprehensive escalation of sanctions, Russia has been encircled in the traditional financial world: foreign exchange reserves frozen, major banks excluded from SWIFT, Visa and Mastercard collectively withdrawing. For a country whose lifeblood is energy and commodity exports, this is almost like having its neck twisted.

But the on-chain data tells another story:

According to Chainalysis' statistics on European crypto activity from July 2024 to June 2025, Russia received $376.3 billion equivalent in crypto assets during this period, ranking first in Europe, far surpassing the $273.2 billion of the UK.

In Bitcoin mining, Russia is no longer a hidden player. According to the latest estimate from the Hashrate Index data platform, by the end of 2024, Russia held about 16% of the global Bitcoin hashrate — second only to the United States.

These two numbers may seem cold, but they are enough to illustrate:

As the world tries to push Russia out of the traditional financial system, a new underground crypto economy is rapidly growing.

If OTC traders like Alexey are considered capillaries, then local exchanges like Garantex are the heart of the black market.

Garantex was originally registered in Estonia but has always focused its operations on Moscow. Starting in 2022, it was successively blacklisted by the U.S. Department of the Treasury and the European Union, accused of facilitating ransomware, dark web transactions, and providing services to sanctioned banks.

In theory, such a platform should have long been "dead." However, in September 2025, a report released by the International Consortium of Investigative Journalists (ICIJ) revealed that despite facing multiple crackdowns, Garantex was actually "continuing to operate in the shadows," providing cryptocurrency exchange and transfer services to Russian and regional customers through a network of offshore companies, mirror sites, and proxy accounts.

More significantly, a detailed report by the blockchain analytics firm TRM Labs indicated that in 2025, Garantex and the Iranian exchange platform Nobitex together accounted for over 85% of the inflow of cryptocurrency funds into sanctioned entities and jurisdictions.

In March 2025, Tether froze a USDT wallet associated with Garantex, worth approximately $280,000 (about 25 billion rubles), leading the exchange to announce a suspension of its operations. However, a few months later, the U.S. Department of the Treasury sanctioned a new name: Grinex — "a cryptocurrency exchange platform created by Garantex employees to help evade sanctions."

The black market's heart took a blow but resurged in a new form.

II. A7A5: The Ambition and Paradox of "Ruble On-chain"

USDT may be the current star of Russia's shadow economy, but in the eyes of Moscow officials, it has a fatal flaw — it's too "American" and too "centralized."

In 2025, a new player quietly emerged: A7A5, a stablecoin issued by a Kyrgyzstan-based platform, claiming to be "ruble-backed."

The Financial Times revealed in an investigation that within four months, A7A5 completed approximately $60-80 billion equivalent transactions, with the majority occurring on weekdays and concentrated during Moscow trading hours, with the custodial bank being Russia's sanctioned Promsvyazbank.

The EU and UK sanctions documents bluntly described it as a "tool for Russia to evade sanctions." By October 2025, the EU officially sanctioned A7A5, and blockchain analytics firms also noted its close ties with Garantex and Grinex, becoming a new central node in Russia's cryptocurrency settlement network.

The role played by A7A5 is very subtle:

1. For Russian companies, it is a "Ruble stablecoin that can bypass USDT risk";

2. For regulators, it is a "hidden tool to put the Ruble on-chain and bypass bank scrutiny."

Behind this is an increasingly clear idea in Russia: "Since we cannot do without stablecoins, at least some of it should be issued by us."

The paradox lies in the fact that any stablecoin aiming for global adoption must rely on infrastructure that Russia cannot control: public blockchains, cross-border nodes, overseas exchanges, and third-country financial systems.

A7A5 aims to be a "sovereign stablecoin," yet it must circulate in a world that Russia does not fully control. This captures the essence of Russia's entire crypto strategy — it wants to break free from Western finance but has to continue using the Western-built "blockchain financial building blocks."

Three, What Does Crypto Mean for Russia? Not the Future, but the Present

The Western world often sees crypto as an asset, a technology, or even a culture. But in Russia, it plays a completely different role:

1. For Businesses: Crypto is an Alternative Channel for Trade Settlement

Russian companies import high-tech parts, drone components, industrial instruments, and even consumer goods that cannot be paid for through traditional banking systems. This has created a discreet but stable route: Russian companies export to intermediaries in the Middle East/Central Asia, then use USDT/USDC to transact with suppliers, and finally convert back to Rubles over-the-counter in Moscow.

It's not sophisticated, romantic, or "decentralized," but it's functional, operative, and viable.

Here, crypto is not a dream but the least efficient yet the only operational realism.

2. For the Youth, Crypto is an Exit from the Ruble

The Russian banking system has long suffered from lack of trust, and the Ruble's longstanding fragility has made crypto the most natural safe haven for the middle class and young engineers.

If you ask a random Moscow software engineer, what they tell you might not be "I'm into crypto," but "I convert my salary to USDT, keep it with a trusted OTC team on Telegram. Bank cards get frozen, but the chain won't freeze me."

This statement is a microcosm of contemporary Russia.

3. For the Nation, Crypto and Mining are the "Digital Energy Export"

Russia has some of the world's cheapest electricity—Siberian hydroelectric and stranded natural gas have turned into a Bitcoin mining paradise.

Mining provides: a "export product" outside the banking system, a globally exchangeable digital commodity, a way to bypass financial blockades

The Russian Ministry of Finance has officially admitted multiple times that "mining revenues are an essential part of the national trade system."

This is no longer a grassroots activity, but rather a quasi-national economic sector.

4. On the Grey System: Cryptography is the Invisible Lubricant

This part is difficult to quantify, but existing facts include European intelligence agencies pointing to Russian intelligence using encryption for information warfare, hacker action payments, large-scale underground funds shuttling between Europe and Russia via stablecoins, and various smuggling networks highly relying on on-chain fund pathways.

Is Russia a "Crypto Power"?

The answer is more complex than imagined. If you measure it by technological innovation, it is not. If you look at it from the perspective of VC projects and DeFi, it is not either. If you measure it by mining, on-chain transaction volume, stablecoin inflow, trade settlement reliance, it is a cryptographic force that the world cannot ignore.

It did not "voluntarily become" one, but "was driven by the world to become one."