Kyrgyzstan Reaches Out to US and UK Officials Regarding Restrictions on Cryptocurrency Networks

On Thursday, President Sadyr Japarov called on U.S. and UK leaders after the UK enacted sanctions on Kyrgyz crypto networks accused of helping Russia evade Western measures.

On Wednesday, the UK targeted eight individuals and entities, including four businesses from Kyrgyzstan, accused of facilitating sanctions evasion via cryptocurrency transactions.

“We should not politicize the economy,” Japarov stated to state news agency Kabar.

Kyrgyzstan’s involvement in Russia’s sanctions evasion efforts has grown increasingly significant over recent years. Since the 2022 invasion of Ukraine, the country has served as a vital transit center for Russian trade and parallel imports—bilateral trade reached $3.5 billion in 2024, and Russian investment in Kyrgyzstan rose nearly 25%—while exports of dual-use goods from China to Kyrgyzstan and Kazakhstan surged by 64% in a year.

Concurrently, Kyrgyzstan has been developing its cryptocurrency sector. Earlier this year, it appointed Binance creator Changpeng “CZ” Zhao as an advisor on digital assets, and by late 2024, over 100 VASP licenses had been issued. However, it has also become increasingly tied to illicit financial movements from Russia.

Focus on A7A5 Stablecoin Sanctions

The sanctions have affected both Luxembourg-based and Kyrgyz entities, including crypto exchanges Meer and Grinex, connecting them to A7A5, a rouble-pegged stablecoin initiated in Kyrgyzstan and accessible on Tron and Ethereum blockchains. The UK reported that A7A5 processed $9.3 billion within just four months.

Grinex, which TRM Labs analysts indicated in July might be a rebranded successor to the sanctioned Garantex exchange, began allowing withdrawals in A7A5 shortly after law enforcement disrupted Garantex in March.

TRM Labs has observed that exchanges registered in Kyrgyzstan, such as Grinex and Meer, exhibit similar on-chain behaviors as Garantex, suggesting a level of coordination within Russia’s illicit financial system. Many of these platforms reportedly share addresses, founders, and contact information, raising concerns they could be shell companies.

“It’s reassuring to see the UK take firm measures against these entities, which have long been connected to Russian sanctions evasion,” Isabella Chase, head of policy for EMEA at TRM Labs, mentioned to Decrypt.

“These sanctions will hinder the operations of these entities and will be recognized in the EU and US.”

Additionally, Western officials claim that the A7A5 token, alongside Kyrgyz exchanges Grinex and Meer, was structured to evade sanctions and redirect billions back to Moscow.

“If the Kremlin believes it can obscure its desperate efforts to alleviate the impact of our sanctions through questionable crypto networks, it is mistaken,” stated UK sanctions minister Stephen Doughty.

“These sanctions maintain pressure on Putin during a crucial period while targeting the illicit networks funneling money into his war efforts.”