In a landmark move signaling a cautious embrace of digital innovation, President Serdar Berdimuhamedov of Turkmenistan has signed the "Law on Virtual Assets," officially legalizing cryptocurrency mining operations and the establishment of crypto exchanges within the country.
This legislation, enacted on November 28, 2025, marks a significant pivot for the Central Asian nation, long known for its tightly controlled economy and limited exposure to global financial trends. By integrating virtual assets into its legal framework, Turkmenistan aims to foster technological advancement while imposing stringent safeguards to mitigate risks.
Under the new law, virtual assets - defined broadly as digital representations of value that can be traded or transferred - are recognized as objects of civil law. However, they explicitly do not qualify as legal tender, foreign currency, or securities, ensuring they remain outside the realm of everyday transactions.
This distinction aligns with global standards, such as those set by the Financial Action Task Force (FATF), emphasizing anti-money laundering (AML) and counter-terrorism financing measures. Virtual assets can be either backed by tangible reserves or unbacked, providing flexibility for developers and investors while maintaining oversight.
A key pillar of the law is the regulation of mining activities. Both individual entrepreneurs and legal entities are now permitted to engage in cryptocurrency mining, a process that involves using computational power to validate transactions and secure blockchain networks.
To operate legally, all miners must register electronically with the Central Bank of Turkmenistan, a step designed to create a traceable ecosystem and prevent illicit operations.
This registration requirement echoes similar mandates in neighboring Kazakhstan, where mining has boomed since 2021, contributing up to 18.5% of the country's Bitcoin mining hashrate as of mid-2025, thanks to abundant cheap energy from hydroelectric and gas sources. In Turkmenistan, with its vast natural gas reserves - accounting for over 90% of exports and positioning it as the world's fourth-largest holder - the potential for low-cost, energy-intensive mining is immense.
However, the law differentiates between industrial-scale operations, which could leverage state-backed energy infrastructure, and smaller private setups, imposing varying compliance burdens to balance innovation with resource conservation.
Crypto exchanges and virtual asset service providers (VASPs), including trading platforms and currency exchangers, will require licensing from the Central Bank. This licensing process will scrutinize applicants for financial stability, technical security, and adherence to international best practices.
Users opening wallets or accounts on these platforms must undergo full identity verification under Turkmenistan's AML laws, a measure that could limit accessibility in a country where internet penetration hovers around 20-25% and digital literacy remains low.
For context, this is a stark contrast to Uzbekistan, another Central Asian peer, which in 2019 became one of the first in the region to legalize crypto exchanges and has since seen over 50 licensed VASPs thrive, attracting remittances from its diaspora and boosting GDP contributions from the sector to an estimated 0.5% by 2024.
The legislation also introduces robust guidelines for advertising virtual assets, reflecting a commitment to consumer protection. Promotions must include prominent risk warnings, such as the volatility of crypto prices - Bitcoin, for instance, has swung from $16,000 in late 2022 to over $100,000 in early 2025 - and the potential for total loss of investment.
Advertisements are prohibited from touting guaranteed returns, bonuses, or associating crypto with luxury lifestyles, and they cannot feature minors to avoid targeting vulnerable groups. These rules draw inspiration from the European Union's MiCA regulation, which took effect in 2024 and has helped curb misleading marketing across the continent.
This development comes against the backdrop of Turkmenistan's evolving economic landscape. The country, with a GDP of approximately $60 billion in 2024 (largely from gas exports to China and Europe), has faced challenges including U.S. sanctions on its state-owned energy firms and a black-market exchange rate for its manat currency that can be up to 10 times the official rate.
Prior to this law, cryptocurrencies operated in a legal gray area; informal trading persisted via peer-to-peer networks, but official involvement was nonexistent, mirroring the government's broader skepticism toward decentralized finance. The shift appears driven by a strategic roadmap outlined in June 2025, which envisions virtual assets as a tool for economic diversification and attracting foreign direct investment (FDI). Analysts project that, if implemented effectively, the sector could generate $500 million in annual revenue by 2030, particularly through mining powered by flared gas that currently goes to waste—estimated at 10-15 billion cubic meters annually.
Yet, challenges abound. Turkmenistan's authoritarian governance and restricted internet access, enforced through state firewalls, could hinder widespread adoption. Energy reliability is another concern; while the country boasts 19.5 trillion cubic meters of proven gas reserves, distribution inefficiencies have led to frequent blackouts. Moreover, integrating with global blockchains will require bridging the digital divide, potentially through partnerships with international firms like those in Singapore or Dubai, which have become crypto hubs.
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As Turkmenistan steps tentatively into the crypto era, this law represents more than regulatory reform - it's a bet on blockchain's potential to modernize a resource-dependent economy. Whether it catalyzes a regional fintech renaissance or falters under bureaucratic weight remains to be seen, but for now, it positions the "Switzerland of Central Asia" as an unexpected player in the $2.5 trillion global crypto market. Investors and innovators worldwide will be watching closely as Ashgabat charts this uncharted course.
Author: Slava Vasipenok
Founder and CEO of QUASA (quasa.io) — the world's first remote work platform with payments in cryptocurrency.
Innovative entrepreneur with over 20 years of experience in IT, fintech, and blockchain. Specializes in decentralized solutions for freelancing, helping to overcome the barriers of traditional finance, especially in developing regions.
This is not financial or investment advice. Always do your own research (DYOR).
