How Russia Uses Kyrgyzstan’s Crypto Sector to Evade Sanctions: New Insights Revealed

Kyrgyzstan's Crypto Market Becomes a Sanctions Loophole for Russia

A recent report reveals how Russia may be leveraging the fast-growing cryptocurrency market in Kyrgyzstan to sidestep international sanctions and move funds across borders. With Kyrgyzstan’s crypto industry expanding at a remarkable pace, the region now finds itself at the center of global concern about illicit financial flows.

Rapid Growth of Kyrgyzstan’s Virtual Asset Industry

Since Kyrgyzstan enacted its “On Virtual Assets” law in 2022, the nation’s virtual asset sector has surged dramatically, according to an analysis by blockchain intelligence firm TRM Labs. By October 2024, authorities had granted 126 licenses to virtual asset service providers (VASPs), and these licensed crypto platforms processed an astonishing $4.2 billion in transactions during just the first seven months of 2024.

Despite its legal progress, Kyrgyzstan’s regulatory framework remains relatively underdeveloped, creating opportunity for foreign actors, particularly Russian networks, to exploit the system and evade economic sanctions imposed by Western nations.

Key Exchanges Under International Scrutiny

Successor Platforms to Russia’s Garantex

The TRM Labs report highlights Kyrgyz-registered crypto exchanges such as Grinex and Meer. Both exchanges emerged shortly after U.S. law enforcement took down the Russian trading platform Garantex in March 2025. Blockchain forensics indicate that Grinex and Meer share similar wallet infrastructure and transactional behaviors with Garantex, suggesting they may serve as successor entities. These firms have aided Russian users in moving assets through A7A5, a stablecoin tethered to the Russian ruble that has long raised concerns about its role in facilitating sanctioned transactions.

Connections to Sanctioned Groups

Further investigations uncovered that Envoys Vision Digital Exchange (EVDE), another Kyrgyz platform, was linked to wallets associated with Russia’s sanctioned paramilitary Rusich Group. Alarmingly, many of these crypto exchanges appear to be shell companies, often sharing identical addresses, founders, and contact information—signaling possible coordinated operations or shared illicit management.

Calls for Stronger Oversight and Regulatory Reforms

TRM Labs warns that Kyrgyzstan is not necessarily complicit but rather vulnerable due to its loose oversight. Without stricter measures—such as more rigorous VASP registration processes, transparency in ownership, and stronger barriers against shell firms—Kyrgyzstan could remain a key route for Russian networks to bypass global sanctions.

If these loopholes persist, analysts caution that similar methods may spread to other Central Asian nations like Kazakhstan and Uzbekistan, both of which are unveiling crypto-friendly laws. The ongoing exploitation of Kyrgyzstan’s cryptocurrency infrastructure could ultimately undermine the effectiveness of international financial sanctions and destabilize the regional crypto market.