A new report from TRM Labs reveals that Kyrgyzstan's cryptocurrency sector has become primarily linked to Russian entities, particularly following the invasion of Ukraine. The report indicates that Russia-linked activities dominate Kyrgyzstan's crypto industry, which was almost nonexistent prior to 2022. Many platforms in Kyrgyzstan are associated with the shuttered Russian exchange Garantex, which facilitated over $100 billion in transactions before its closure due to international enforcement actions. The Kyrgyz government has embraced crypto, enacting a pro-crypto law in early 2022 that spurred rapid expansion, primarily due to demands from Russian users. Despite significant transaction volumes, the report states that there is minimal local usage, indicating that Kyrgyzstan's growth is mainly driven by external demand. This situation raises concerns regarding regulatory oversight and the potential for illicit financial activities to exploit the country's weak governance structures and political climate, as highlighted by Transparency International.

Source 🔗