Kyrgyzstan’s Crypto Transactions Reach $7 Billion

The volume of crypto asset transactions in Kyrgyzstan has reached $7 billion, according to the head of the nation’s state-controlled investment agency.

The official announced this figure at a meeting with the top U.S. representative in the country, where cryptocurrency was a primary topic.

This news follows recent reports that the former Soviet Republic is being used by Russia to bypass war-related sanctions, including trading through its crypto exchanges.

Kyrgyzstan Unveils Total Value of Domestic Crypto Transactions

The digital economy, particularly the crypto market, was central to discussions between Farkhat Iminov, Director of Kyrgyzstan’s National Investments Agency (NIA), and American Ambassador to Bishkek, Lesslie Viguerie, as reported by local news outlet Knews.

During the meeting, Iminov reminded the U.S. diplomat that Kyrgyzstan regulated its cryptocurrency sector in 2022 with the law on “On Virtual Assets.”

By the end of 2024, the registered crypto turnover amounted to $7 billion, according to the head of the state agency, which reports directly to President Sadyr Zhaparov’s administration.

Kyrgyzstan is recognized as a leader in Central Asia for the development of blockchain technologies, cryptocurrency mining, digital assets, and artificial intelligence (AI).

In this context, the U.S. ambassador praised the introduction of the digital som, the central bank digital currency (CBDC) issued by the National Bank of the Kyrgyz Republic, calling it one of the most innovative steps in the region and indicative of Kyrgyzstan’s commitment to digital transformation.

A press release stated that both sides discussed current investment initiatives and future joint projects, with the American representative stressing the importance of Washington’s assistance in simplifying business procedures in the country.

The Kyrgyz official noted that his agency serves as an intermediary between businesses and state institutions, expressing readiness to support U.S. and other partners in investment projects within Kyrgyzstan.

Kyrgyzstan’s Role in Russia’s Sanctions Evasion

The formal statements from the meeting, quoted by NIA’s press service, did not clarify whether Iminov and Viguerie discussed allegations of Russia exploiting Kyrgyz crypto platforms to evade Western financial and trade restrictions.

A report from blockchain analytics firm TRM Labs highlighted a growing pattern of Russian actors using Kyrgyzstan to evade sanctions and acquire dual-use goods for the war in Ukraine. It stated:

> “Kyrgyz-registered exchanges have repeatedly facilitated transactions linked to sanctioned Russian entities. Many of these virtual asset service providers show indicators of being shell companies.”

Some of these coin trading venues demonstrated behavior akin to Garantex, a sanctioned Russian exchange dismantled by U.S. law enforcement in March. Grinex, another high-risk exchange believed to have taken Garantex’s place, was also registered in Kyrgyzstan.

Weeks after Garantex shut down, Grinex began processing withdrawals using a Russian stablecoin known as A7A5. According to the Financial Times, this ruble-pegged digital currency has been used to transfer over $9 billion worth of assets in four months.

The stablecoin was launched in Kyrgyzstan by fugitive Moldovan oligarch Ilan Sor, with reserve assets deposited at Promsvyazbank, a Russian bank under sanctions by the U.S. and EU.

“On-chain analysis suggests that Grinex and other Kyrgyz-based exchanges may have played a role in moving funds following the takedown of Garantex, highlighting Kyrgyzstan’s growing role as a conduit for post-sanctions Russian financial activity,” TRM Labs noted.