A report by TRM Labs reveals that Kyrgyzstan's cryptocurrency sector is predominantly linked to Russia, which has used this environment to bypass international sanctions. Following the invasion of Ukraine in 2022, the crypto industry in Kyrgyzstan, previously nearly non-existent, has rapidly expanded due to Russian demand. Many local platforms are associated with Russian exchanges like Garantex, which was shut down after facing scrutiny. Additionally, these platforms exhibit similar registration details indicative of shell companies. The report also highlights that Kyrgyzstan’s crypto exchanges facilitate significant ruble-to-crypto transactions, incorporating Russian-backed stablecoins. Despite the assertions of robust growth, there is little evidence of local adoption, pointing to the sector’s reliance on external influences. Furthermore, Kyrgyzstan’s weak governance, characterized by a lack of transparency, poses risks that may allow illicit financial flows to continue unchecked. Experts stress the importance of stronger anti-money laundering measures to protect against exploitation by sanctioned entities and corrupt actors.

Source 🔗