A report by TRM Labs indicates that Kyrgyzstan is being utilized by Russian entities to circumvent international sanctions through its burgeoning cryptocurrency industry, which saw minimal activity before the Ukraine invasion in 2022. The report highlights that nearly all cryptocurrency transactions in Kyrgyzstan are linked to Russian operations, particularly those connected to the now-defunct exchange Garantex. Analysis revealed that many Kyrgyz crypto platforms operate similarly to shell companies and share common addresses and founders. The growth of this sector, driven by Russian demand, raises concerns as there appears to be little local retail usage. Experts note that Kyrgyzstan's political climate, characterized by weak institutional checks, facilitates the exploitation of its financial systems by sanctioned Russian entities. The report mentions organizations like the Rusich Group using Kyrgyz exchanges for nefarious transactions. With the Kyrgyz government adopting pro-crypto regulations, over 126 virtual asset service providers are currently licensed, signifying the significant impact of Russian activity on Kyrgyzstan's crypto market.

Source 🔗