Research from TRM Labs has revealed that Russian-linked activities dominate Kyrgyzstan's cryptocurrency industry, which was nearly non-existent before Russia's invasion of Ukraine in 2022. The report indicates that Kyrgyzstan acts as a front for platforms associated with the now-closed Russian exchange Garantex. These platforms facilitate large-scale ruble-to-crypto transactions, primarily driven by Russian demand rather than local usage. Notably, many Kyrgyz firms exhibit common residential addresses and founders, typical of shell companies. Furthermore, entities such as the paramilitary Rusich Group are found using Kyrgyz exchanges to bypass sanctions. The Kyrgyz government implemented a pro-crypto law in January 2022, fostering a significant increase in transaction volume, while experts warn of vulnerabilities in the country's governance that may enable illicit financial flows. With over 126 virtual asset service providers now licensed, the Kyrgyz cryptocurrency sector shows no signs of slowing, even as concerns over corruption and regulatory oversight persist.

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