Turkmenistan Legalizes Crypto Trading Under Tight State Control...

Turkmenistan has passed a sweeping crypto law that legalizes the industry but tightly controls it through licensing and the potential use of state-run ledgers.

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.

Related: IMF warns tokenized markets may deepen flash crashes, says governments will step in

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’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.

Source: CoinTelegraph