Journalist
Hassan Shittu
Journalist
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Turkmenistan has taken a rare step by legalizing cryptocurrency mining and exchange operations, while at the same time drawing a hard line against the use of digital assets as a form of payment.
The move, signed into law by President Serdar Berdimuhamedov in late November and taking effect on January 1, 2026, marks a major policy shift for one of the world’s most closed and tightly controlled economies.
Turkmenistan Ends Crypto Ban With Central Bank in Charge
Under the new “Law on Virtual Assets,” cryptocurrency mining and trading are now permitted, but only within a strictly regulated framework overseen by the country’s central bank.
Digital assets are brought under civil law, and a licensing regime has been introduced for exchanges, custodial services, and mining operations.
However, the legislation is explicit that cryptocurrencies will not be recognized as legal tender, currency, or securities, and cannot be used to pay for goods or services inside the country.
The structure of the law reflects Turkmenistan’s broader economic and political model. All miners, whether individuals or companies, must register their equipment and operations with authorities.
Exchanges are subject to mandatory know-your-customer and anti-money laundering rules, anonymous wallets are prohibited, and advertising is tightly restricted.
Credit institutions are barred from offering crypto services, and regulators retain the authority to halt operations or void token issuances if deemed necessary.
The central bank is also empowered to authorize specific distributed ledger systems, effectively steering activity toward permissioned and closely monitored networks.
The decision comes after years of a near-total ban on crypto activity. Before the law was signed, mining and trading were illegal, and authorities periodically raided unregistered operations and seized equipment.
Despite that, an underground crypto community existed, operating through VPNs, peer-to-peer platforms, and covert mining setups to bypass internet restrictions and enforcement.
Reliable data on the size of that community was scarce, but projections suggest that by the end of 2026,
Turkmenistan could have nearly 500,000 cryptocurrency users, representing about 6.4 percent of the population, as activity moves into the legal sphere.
Abundant Energy Meets Fragile Grid in Turkmenistan’s Crypto Bet
Energy availability is one of the factors drawing attention to Turkmenistan’s policy change.
The country has abundant natural gas reserves and produces more electricity than it consumes, with installed generation capacity exceeding 5.4 gigawatts against peak domestic demand of around 4.3 gigawatts.
Low energy costs could, in theory, make the country attractive for energy-intensive crypto mining. However, analysts note that the main challenge lies in the electricity grid itself.
Much of the transmission and distribution infrastructure dates back to the Soviet era and suffers from frequent outages, inefficiencies, and power quality issues.
While generation capacity is sufficient, the lack of grid stability raises questions about whether large-scale, industrial mining can operate reliably without substantial private investment in dedicated infrastructure and power conditioning systems.
The new crypto framework also sits against the backdrop of Turkmenistan’s fragile currency environment.
The national currency, the Turkmenistani manat, remains the only legal means of payment, and the government maintains strict controls to protect it.
The official exchange rate has long been fixed at around 3.5 manat to the U.S. dollar, while a much weaker rate reportedly exists on the black market, reflecting devaluation pressures and capital controls.
Official inflation data is limited, but high inflation is widely suspected, contributing to informal dollarization for savings and larger transactions.
By banning crypto as a payment method, authorities appear intent on preventing digital assets from competing with the manat or weakening monetary control.
