A report from TRM Labs indicates that Kyrgyzstan is increasingly utilized by Russian entities to circumvent international sanctions. The study reveals that nearly all of Kyrgyzstan's cryptocurrency activities are linked to Russian interests, which surged following Russia's invasion of Ukraine in 2022. Many Kyrgyz platforms exhibit similarities suggesting they operate as shell companies, consolidating transactions predominantly involving the Russian exchange Garantex, which was shut down in March 2025 due to international regulatory actions. The report highlights that despite a pro-crypto law introduced in Kyrgyzstan in January 2022, there is little evidence of local engagement with the cryptocurrency market. Instead, the growth is driven by Russian demand, with Kyrgyz exchanges now crucial pathways for Russian entities, including sanctioned groups, to access global financial networks. The political landscape in Kyrgyzstan, characterized by weak governance, raises concerns over illicit financial flows being facilitated through these virtual asset service providers (VASPs). With over 126 licensed VASPs, the sector shows no signs of slowing down, posing significant regulatory challenges.

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