Turkmenistan Legalizes Cryptocurrency Trading with Strict Regulations Starting 2026

Turkmenistan is set to legalize cryptocurrency trading and establish strict regulations for the industry starting in 2026. This decision marks a significant shift in policy for a country known for its tightly controlled economy.

Key Takeaways

Legalization of cryptocurrency trading in Turkmenistan will commence in 2026.
New regulations will include licensing, Anti-Money Laundering (AML) measures, and customer verification.
The law categorizes cryptocurrencies as neither legal tender nor securities.
The central bank will oversee certain aspects of the crypto framework, including possible creation of its own digital ledger.
The move aligns Turkmenistan with a global trend of governments adapting to cryptocurrency and stablecoin frameworks.

Turkmenistan legalizes crypto trading under tight state control from 2026

Turkmenistan's New Law on Cryptocurrency

Turkmenistan has officially approved a comprehensive law that will legalize and heavily regulate the cryptocurrency sector, representing a significant change for one of the most closed economies in the world. As reported by Business Turkmenistan on November 28, President Serdar Berdimuhamedov has enacted legislation that will take effect in 2026.

The law sets forth various regulations including licensing processes, know-your-client (KYC) requirements, Anti-Money Laundering policies, and mandates for cold storage for cryptocurrency exchanges and custodial services. Additionally, it prohibits traditional banking institutions from offering crypto services, and it grants the state the authority to halt, cancel, and mandate refunds for token issuances.

Cryptocurrency mining and mining pool operations will be required to register, while covert mining activities will be banned. Furthermore, the nation’s central bank is empowered to approve distributed ledger technology or develop its own system, potentially subjecting citizens to a monitored, controlled infrastructure.

The legislation categorically states that cryptocurrencies are not recognized as legal tender, currency, or securities in Turkmenistan. It delineates two types of digital assets: backed and unbacked. The law stipulates that regulators will determine the conditions for liquidity, settlement, and emergency redemption for backed assets.

President of Turkmenistan Serdar Berdimuhamedov. Source: Wikimedia

Broader Context of Crypto Regulation

Turkmenistan's decision is aligned with a wider movement as governments around the globe are rapidly developing frameworks for cryptocurrencies and stablecoins. Notably, the UK's tax authority has recently proposed a new tax structure that alleviates some burdens for decentralized finance (DeFi) users by postponing capital gains taxes on crypto-related lending and liquidity pool activities until tokens are sold.

Similarly, Bank of England Deputy Governor Sarah Breeden has expressed her expectation for the UK to align with the United States in regulating stablecoins, suggesting that major jurisdictions are likely to adopt similar regulatory approaches as stablecoins become integral to payment and settlement systems.

Additionally, international regulatory bodies are beginning to recognize the need for revised methods. Erik Thedéen, the governor of the Swedish central bank and chair of the Basel Committee on Banking Supervision, indicated that a “different approach” might be necessary to address the current 1,250% risk weighting for crypto exposures, especially as some nations refuse to comply.

A permanently burning crater in Turkmenistan. Source: Wikimedia

The Unique Political Landscape of Turkmenistan

Turkmenistan, a former Soviet republic located in Central Asia, boasts a population of approximately 7 million and an economy predominantly reliant on natural gas exports. The political landscape is characterized by an extremely centralized presidential system, often regarded as one of the world's most repressive authoritarian regimes, where platforms like X and Telegram are banned.

As a country with a national holiday celebrating melons, it also holds one of the largest natural gas reserves globally, which fuels a natural phenomenon known as “the door to hell.” The capital city of Ashgabat is notable for containing the Guinness World Record for the highest density of white marble buildings as well as the largest indoor Ferris wheel.

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