The report shows how Russia is using Kyrgyzstan's Crypto Assets market to evade sanctions.

According to Coinworld news, has Russia turned Kyrgyzstan's booming cryptocurrency market into a backdoor for transferring funds? A new report reveals how exchanges registered in Kyrgyzstan are helping Russian networks evade sanctions. According to data from TRM Labs, Kyrgyzstan's cryptocurrency industry has grown from nearly zero to billions of dollars in trading activity since the "Virtual Assets" bill was passed in 2022. By October 2024, authorities had issued 126 licenses for virtual asset service providers (VASP), and in the first seven months of 2024 alone, the licensed platforms recorded a trading volume of $4.2 billion. However, due to relatively weak regulation of the local industry in the region, this rapid growth has made it an ideal base for entities seeking to evade sanctions. TRM Labs' report points to the Grinex and Meer cryptocurrency exchanges, which emerged in Kyrgyzstan shortly after U.S. law enforcement dismantled Russia's Garantex in March 2025. On-chain analysis suggests that these two suspected successor companies used wallet infrastructure and trading models similar to Garantex, helping Russian users transfer funds via A7A5 (a stablecoin pegged to the Russian ruble that has long faced scrutiny). Crypto.news reported earlier in June that a study by the Financial Times showed that the A7A5 stablecoin has quietly transferred billions of dollars since its launch and is linked to sanctioned entities, indicating it may be part of broader efforts to evade Western sanctions and facilitate cross-border payments for Russian entities. Another exchange, Envoys Vision Digital Exchange (EVDE), was found to be associated with wallets linked to Rusich Group (a sanctioned Russian paramilitary organization). Many of these platforms also show signs of shell companies, including the same registered addresses, common founders, and reused contact information, indicating coordinated or shared illegal control. TRM Labs warns that while Kyrgyzstan may be exploited rather than complicit, weak regulation has opened the door. Without stricter controls on VASP registration, clearer ownership rules, and more stringent checks on shell companies, Russia's financial networks will continue to exploit the country's cryptocurrency infrastructure. If left unaddressed, similar strategies could also spread to neighboring Kazakhstan and Uzbekistan, which are already working on introducing cryptocurrency-friendly regulations, undermining international sanctions.