A report from TRM Labs reveals that Kyrgyzstan's cryptocurrency industry is heavily influenced by Russian entities, primarily as a means to evade international sanctions post-Ukraine invasion. The study found that activity linked to Russian exchanges, mainly Garantex, dominates Kyrgyzstan's crypto market, which was virtually nonexistent before February 2022. Experts noted that the political conditions in Kyrgyzstan create vulnerabilities that sanctioned Russian individuals exploit, using local platforms like Grinex to facilitate large-scale transactions. Many Kyrgyz crypto platforms share residential addresses and founders, indicating they may be shell companies. Furthermore, the report highlighted that Kyrgyz firms facilitate transactions involving ruble-to-crypto conversions, becoming critical to the global financial system integration for Russian actors. This growth has occurred alongside Kyrgyzstan's pro-crypto regulatory changes introduced in early 2022, aimed at establishing a robust virtual asset framework, but raises concerns about the absence of local demand and significant governance issues that could allow further exploitation by illicit actors.

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