Russia and China are two of Iran’s key partners in its conflict with the US. Does their support extend to cryptocurrency exchange? Seemingly not – so far. However, existing channels could easily facilitate it.

The Telegraph recently reported that in 2018, Russia’s defence-focused Promsvyazbank transported USD 2.5bn in cash dollars to Iran to bypass sanctions imposed on Iran by President Trump during his first term. Eagle-eyed crypto watchers will have spotted that Promsvyazbank is also the main financial force behind A7A5, a rouble-denominated stablecoin launched last year. Since then, the conflict in Ukraine has severely reduced Russia’s ability to obtain and spend US dollars, either in physical cash or electronically. However, the rise in stablecoins has changed the rules of the game.

Crypto transfers via friendly exchanges using stablecoins are today’s equivalent of trucks full of dollars. So, it’s entirely possible that Russia may be providing support to Iran through its established crypto infrastructure. A7A5 has been widely reported as an innovative tool for evading sanctions, moving USD100bn in less than a year of operation.

One striking example is the A7A5-USDT (Tether) stablecoin swap pair, which effectively allowed rouble-denominated value to be exchanged for dollar-dominated value, despite sanctions restricting conventional financial transactions between the two currencies.

What’s more, one of the main exchanges handling A7A5, Grinex, is believed to be little more than a copypaste of Garantex, an exchange that was shut down for alleged money laundering and sanctions violations in an international operation between Finland, the US and Germany. Grinex started up shortly after Garantex’ closure.

As for China – comparable crypto support for Iran is unlikely as there are no viable yuan stablecoins and official use of cryptocurrency is less widespread than in Russia. However, that doesn’t rule out the use of Chinese-connected illicit finance networks or crypto exchange compliance failures to move funds for Iranian conflict actors. Recent reporting claims that Binance accounts for Singapore-based Chinese nationals, and those of Hong Kong-based companies, were part of a chain of crypto transfers moving funds to the Iranian Revolutionary Guard Corps (IRGC), as well as their Houthi allies.

Navigating the fast-paced world of conflict and illicit finance is an increasing challenge for companies worldwide, and cryptocurrency has only made it more acute. FACT’s regional and technical expertise helps organisations manage complex compliance and due diligence scenarios with greater confidence.