Turkmenistan Legalizes Crypto with Strict Regulatory Framework

Turkmenistan Embraces Crypto with a Heavy Regulatory Hand

In a significant policy shift, Turkmenistan has approved a comprehensive law to legalize and strictly regulate its cryptocurrency industry. This move marks a major transformation for one of the world's most closed economies.

According to a November 28 report from local news outlet Business Turkmenistan, President Serdar Berdimuhamedov signed the law governing the crypto sector. Set to take effect in 2026, the new law establishes stringent licensing, Know-Your-Customer (KYC), Anti-Money Laundering (AML), and cold storage requirements for crypto exchanges and custodial services. Credit institutions are barred from providing crypto services. The state reserves the right to halt, void, or demand refunds for token issuances.

Furthermore, the law mandates registration for cryptocurrency mining and mining pool operations, while explicitly prohibiting covert activities. It also empowers the country's central bank to authorize or operate distributed ledgers, potentially directing citizens towards permissioned and surveilled infrastructure.

The law clearly stipulates that cryptocurrencies are neither legal tender, currency, nor securities within Turkmenistan. Digital assets are categorized into backed and unbacked types. Regulators will define conditions for liquidity backing, settlements, and emergency redemption for assets in the backed category.

This legislative action follows a governmental meeting on November 21, during which Deputy Chairman of the Cabinet of Ministers, Hojamyrat Geldimyradov, presented a report on the subject.

The report laid the “legal, technological, and organizational foundations” for introducing digital assets in Turkmenistan. Accompanying the document was a proposal to establish a “special State Commission” dedicated to the industry.

Turkmenistan Follows a Global Trend

Turkmenistan’s move is part of a global trend where governments are rapidly developing crypto and stablecoin frameworks. Earlier this week, the United Kingdom's tax authority introduced a new tax framework that lightens the burden on decentralized finance (DeFi) users by deferring capital gains taxes on crypto lending and liquidity pool users until the underlying token is sold.

Recently, Bank of England Deputy Governor Sarah Breeden stated that she anticipates the UK will align with the United States on stablecoin regulation, signaling that major jurisdictions may move in tandem as stablecoins become more integrated into payment and settlement systems.

International regulators are also responding to broader trends. Erik Thedéen, the governor of the Swedish central bank and chair of the Basel Committee on Banking Supervision, recently acknowledged the group might require a “different approach” to the current 1,250% risk weighting for crypto exposures, as some countries have resisted compliance.

A Tightly Controlled State Turns to Crypto

The former Soviet republic of Turkmenistan is a landlocked Central Asian nation with a population of approximately 6.5 to 7 million. Its economy is primarily driven by natural gas exports. Local politics are dominated by a highly centralized presidential system widely regarded as one of the most repressive authoritarian regimes.

The country boasts one of the world's largest natural gas reserves, one of which fuels a permanently burning crater known as the “door to hell.” Its capital, Ashgabat, holds the Guinness World Record for the world’s highest concentration of white marble-clad buildings and the world's largest indoor Ferris wheel.