A report by TRM Labs reveals that Kyrgyzstan serves as a hub for Russian cryptocurrency activities, particularly as a front for platforms linked to the defunct Russian exchange Garantex. This surge in crypto activity began post the invasion of Ukraine in 2022, with the report noting that Russian entities now dominate Kyrgyzstan’s crypto sector, which was almost nonexistent prior to the invasion. The analysis highlights numerous Kyrgyz platforms share residential addresses and founders, indicative of shell companies, and are heavily utilized for large ruble-to-crypto transactions using Russian-backed stablecoins like A7A5. The report also cites various organizations exploiting Kyrgyz exchanges to circumvent sanctions, including the Rusich Group. While Kyrgyzstan introduced pro-crypto legislation that spurred rapid growth in virtual asset service providers, there is skepticism regarding local adoption of cryptocurrency. Experts underline that Kyrgyzstan’s weak governance structures and political climate present vulnerabilities, making it susceptible to corruption and illicit financial activities.

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