A report from TRM Labs reveals that Kyrgyzstan’s cryptocurrency industry is predominantly driven by Russian activities aimed at circumventing international sanctions. The analysis indicates that the Kyrgyz crypto sector, previously nonexistent before the Ukraine invasion, has gained momentum primarily due to demand from Russian entities. Many Kyrgyz platforms, linked to Russian exchange Garantex, facilitate large-scale transactions using stablecoins like A7A5. The report highlights that these exchanges are often linked through shared addresses and founder information, resembling shell companies. Experts note that there is minimal local adoption of crypto in Kyrgyzstan, pointing out that the growth is largely a result of Russian interest. The Kyrgyz government passed pro-crypto legislation in 2022, further boosting the sector's growth, with transaction volumes skyrocketing since then. However, the political environment in Kyrgyzstan, characterized by weak governance, raises concerns about the potential for exploitation in financial flows. Without stronger regulations and oversight, the nation remains vulnerable to sanctioned entities leveraging its crypto systems to access global markets.

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