Turkmenistan has approved a sweeping law to legalize and tightly regulate the cryptocurrency industry, marking a major policy shift for one of the world’s most closed economies.
According to a Nov. 28 report from local news outlet Business Turkmenistan, President Serdar Berdimuhamedov signed a law regulating the crypto industry.
The new law, which will come into force in 2026, establishes licensing, know-your-client, Anti-Money Laundering, and cold storage requirements for crypto exchanges and custodial services, and prohibits credit institutions from providing crypto services. The state can also stop, void and force a refund of token issuances.
The law requires registration for cryptocurrency mining and mining pool operations and bans covert operations. It also states that the country’s central bank can authorize distributed ledgers or run its own, potentially forcing citizens onto permissioned, surveilled infrastructure.
The law explicitly states that cryptocurrencies are neither legal tender, currency nor securities in Turkmenistan. The law also divides digital assets into two categories: backed and unbacked. It notes that regulators will establish conditions for the liquidity of backing, settlements and emergency redemption for those in the backed category.
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The law follows the government holding a meeting on the subject on Nov. 21, with the Deputy Chairman of the Cabinet of Ministers Hojamyrat Geldimyradov releasing a report on the matter.
The report provided the foundations “of the legal, technological, and organizational foundations” for the introduction of digital assets in Turkmenistan. The document was accompanied by a proposal to establish “a special State Commission” dedicated to the industry.
Turkmenistan follows a broader trend
Turkmenistan’s move follows governments worldwide rushing to build crypto and stablecoin frameworks. Earlier this week, the United Kingdom’s tax authority floated a new tax framework that eases the burden on decentralized finance 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 also said she expects the UK to keep pace with the United States on stablecoin regulation. This signalled that major jurisdictions may move in parallel as stablecoins become more embedded in payment and settlement systems.
International regulators are also seeing their hands forced by the broader trend. Erik Thedéen, the governor of the Swedish central bank and chair of the Basel Committee on Banking Supervision, recently acknowledged that the group may require a “different approach” to the current 1,250% risk weighting for crypto exposures, following the refusal of some countries to comply.
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A tightly controlled state turns to crypto
The former Soviet republic of Turkmenistan is a landlocked country in Central Asia with a population of about 7 million, with an economy primarily based on natural gas exports. The local politics are dominated by a highly centralized presidential system widely viewed as one of the most repressive authoritarian regimes, and is featured in a list of countries where X and Telegram are banned.
The country — which has a national holiday devoted entirely to melons — also owns one of the world’s largest natural gas reserves, one of which fuels a permanently burning large crater known as “the door to hell.” The country’s 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.
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