A report from TRM Labs reveals that Kyrgyzstan’s cryptocurrency industry, previously almost nonexistent, is now predominantly influenced by Russian entities aiming to evade international sanctions. Notably, the report identifies connections between Kyrgyz platforms and the shut-down Russian exchange Garantex, indicating that Russian demand is driving the rapid growth of Kyrgyzstan’s crypto sector. TRM Labs highlights that the Kyrgyz industry has seen significant transaction volumes, particularly through the use of Russian-backed stablecoins. Experts warn that the political climate in Kyrgyzstan, characterized by weak governance and corruption, poses risks for illicit financial activities. While Kyrgyzstan's government has embraced a pro-crypto stance, the lack of local demand raises concerns about the true nature of the sector's growth, which appears to be an extension of Russian financial activities. Ultimately, the report emphasizes the need for stronger regulatory safeguards to prevent exploitation by sanctioned entities and corrupt actors.

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