The previously completely isolated country of Turkmenistan has passed legislation allowing for legalized crypto mining and exchange operations, with the intention of diversifying its heavily gas-reliant economy with a new technology-based industry.
A Controlled Opening for a Closed Economy
The Government of Turkmenistan, which is widely considered to be one of the most isolated and oppressive nations in the world, has taken an unprecedented step by officially recognizing the crypto industry.
The recently passed “Law On Virtual Assets” was signed into law by President Serdar Berdimuhamedov, and will allow for operations related to crypto under civil legal statutes, and will create an environment for licensing of exchanges, as controlled and regulated by the Central Bank of Turkmenistan.
This legislation represents a substantial and monumental opening for a nation whose financial and broadband internet systems are extremely limited.
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Utilising Energy to Diversify the Economy
Turkmenistan appears to have adopted this strategy indicating the use of its extensive natural gas resources to fund the establishment of a crypto mining industry, which is currently a major strength of Turkmenistan’s economy.
It is a logical conclusion that, by following in the same direction as Kazakhstan after China’s 2021 mining ban, Turkmenistan can take advantage of the surplus energy in order to attract foreign investments and eventually generate revenue.
The new law will enable individuals living in Turkmenistan to engage in crypto mining activities regardless of whether or not they are residents, but they will be required to undergo stringent procedures to establish Know Your Customer (KYC) / Anti-Money Laundering (AML) practices and to undergo with Custody Compliance process through exchanges.
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A Careful Step Toward Digital Finance
This new government ruling marks an important symbolic transition. Nevertheless, it contains several caveats. The government states explicitly that digital assets are not payments, currency, or securities; therefore, it is clear that the government considers crypto to be an industrial and commercial activity subject to taxation, rather than a competitor to its monetary authority.
With the government’s close monitoring of financial and informational flows, the actual speed of adoption and degree of genuine openness with respect to crypto remains to be seen. However, with the creation of this law, Turkmenistan is taking the first steps towards becoming a part of the digital asset world.
FAQs
Is crypto now legal tender in Turkmenistan?
No. To this point, the law explicitly states that crypto is not recognized as a means of payment, legal tender, or a security. Crypto is being regulated as a virtual asset for mining and trading purposes only.
Can foreigners mine crypto in Turkmenistan?
Yes, according to the law. Non-residents are permitted to engage in cryptocurrency mining within the country, provided they register with the relevant authorities.
What does this mean for the average person in Turkmenistan?
In the near term, likely very little. The country has extremely tight controls on internet access and financial activity. Actually, this law creates a legal framework for licensed businesses (exchanges, mining farms), but widespread public access and use will depend on how the government chooses to implement the rules.
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