According to a report by TRM Labs, Kyrgyzstan has become a hub for cryptocurrency activity linked to Russian entities seeking to evade international sanctions following the Ukraine invasion. The analysis reveals that nearly all of Kyrgyzstan's crypto industry is fueled by Russian demand, using platforms tied to the now-closed Russian exchange Garantex. The rapid growth of this sector in Kyrgyzstan, which lacked a notable crypto presence before early 2022, is characterized by numerous exchanges sharing residential addresses and contact details, suggestive of shell companies. Many of these platforms facilitate substantial ruble-to-crypto transactions. Furthermore, the report highlights connections to sanctioned groups in Russia, illustrating how Kyrgyzstan's lax regulatory environment and weak governance create opportunities for financial misdeeds. The potential for expansion remains high, with over 126 virtual asset service providers licensed in Kyrgyzstan and plans for a USD-pegged stablecoin underway. Experts warn that without stronger regulatory measures, Kyrgyzstan could increasingly be exploited for illicit transactions.

Source 🔗