Turkmenistan Approves Cryptocurrency Under Government Oversight, Navigating the Tension Between Oversight and Decentralized Principles

Turkmenistan Embraces Cryptocurrency with New Regulatory Law

Starting January 1, 2026, Turkmenistan will officially permit cryptocurrency trading, introducing a comprehensive regulatory system. President Serdar Berdimuhamedov has enacted legislation that marks a major departure from the nation’s traditionally insular and tightly regulated economic policies. The new framework requires crypto exchanges and custodial platforms to obtain licenses, implement Know-Your-Client (KYC) and Anti-Money Laundering (AML) protocols, and utilize secure cold storage solutions.

Despite these advancements, conventional banks are barred from participating in crypto-related activities. The central bank maintains significant oversight, with the authority to approve distributed ledger technologies or even manage its own blockchain network, effectively channeling crypto operations through state-run systems.

Key Provisions of the New Law

• Cryptocurrencies are not accepted as official currency, but are classified as either “backed” or “unbacked” assets.
• Regulators will set liquidity and redemption standards for backed tokens, while unbacked cryptocurrencies may be subject to additional restrictions to safeguard the financial system.
• All mining operations and mining pools must register with the central bank, and unauthorized mining is strictly prohibited.
• Miners are obligated to store their digital assets in approved cold wallets, with penalties for violations.
• The government reserves the right to cancel token issuances or require refunds, underscoring its centralized approach to oversight.

This legislative move is designed to update Turkmenistan’s economic landscape, encourage legitimate crypto investment, and reduce reliance on natural gas revenues. By clarifying legal standards, officials aim to increase transparency and curb illegal activities, aligning the country with international trends in digital asset governance. The law follows a government session in November that laid the groundwork for digital asset regulation and proposed the creation of a State Commission to supervise the sector.

Global Context and Implications

Turkmenistan’s initiative mirrors a global trend toward digital asset regulation. Other nations, such as the United Kingdom and South Korea, have also introduced policies to integrate cryptocurrencies into mainstream finance, including tax incentives for DeFi users and expanded AML rules. However, Turkmenistan’s distinctly centralized model raises questions about the trade-off between regulatory control and the decentralized ethos of crypto. Experts note that while stringent rules may limit innovation in decentralized finance, they could also strengthen security and consumer safeguards.

The rollout of this law will challenge Turkmenistan to balance its authoritative governance with the open, borderless nature of cryptocurrencies. As the country seeks to become a regulated center for digital assets, its experience may shape both regional adoption and broader international regulatory approaches.