A report by TRM Labs reveals that Kyrgyzstan has become a hub for Russian entities attempting to evade sanctions through cryptocurrency. Following the Russian invasion of Ukraine, the cryptocurrency industry in Kyrgyzstan, which was nearly nonexistent before 2022, has seen significant growth, predominantly driven by Russian demand. The findings indicate that many crypto platforms in Kyrgyzstan are closely linked to the now-defunct Russian exchange Garantex. These platforms facilitate large-scale transactions using Russian-backed stablecoins, effectively acting as conduits for sanctioned entities seeking to access global financial systems. Kyrgyzstan's pro-crypto legislation adopted in January 2022, aimed at recognizing cryptocurrencies as property, has enabled this rapid expansion, with substantial transaction volumes reported. However, experts caution that the lack of robust regulatory frameworks and political corruption in Kyrgyzstan poses risks of exploitation by illicit actors.

Source 🔗