{"id":39198,"date":"2021-03-19T07:00:53","date_gmt":"2021-03-19T05:00:53","guid":{"rendered":"https:\/\/forklog.com\/en\/?p=39198"},"modified":"2025-08-30T08:24:27","modified_gmt":"2025-08-30T05:24:27","slug":"between-prohibition-and-development-how-central-asia-regulates-cryptocurrencies","status":"publish","type":"post","link":"https:\/\/forklog.com\/en\/between-prohibition-and-development-how-central-asia-regulates-cryptocurrencies\/","title":{"rendered":"Between Prohibition and Development: How Central Asia Regulates Cryptocurrencies"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">Central Asia sits at the intersection of several economic and cultural spaces. The region&#8217;s countries\u2014Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan\u2014are influenced by developments in China, Europe and, of course, the post-Soviet space. This also concerns cryptocurrency regulation.<\/span><\/p>\n<p><!--more--><\/p>\n<p><span style=\"font-weight: 400;\">As the industry grows, governments have been crafting <a href=\"https:\/\/forklog.com\/en\/news\/regulation-at-scale-what-changed-for-bitcoin-and-cryptocurrencies-in-2020\"><span style=\"font-weight: 400;\">regulatory norms for the market<\/span><\/a>. Some seek to create a legal framework for legalization; others have taken a prohibitive path \u2014 outright banning the use of Bitcoin as a means of payment and imposing penalties for mining.<\/span><\/p>\n<div class=\"wp-block-text-wrappers-keypoints article_keypoints\">\n<ul class=\"wp-block-list\" id=\"block-16f30156-c97b-4090-80b6-1844e56c1278\">\n<li>Regulation of the cryptocurrency industry in Central Asia is also nuanced. Here is how each country in the region approaches the issue.<\/li>\n<li>In three of the five Central Asian countries, norms to bring cryptocurrencies into the legal framework are actively being developed.<\/li>\n<li>In Kazakhstan and Uzbekistan, certain restrictions have been imposed on cryptocurrency holders.<\/li>\n<li>Digital currencies there cannot serve as a means of payment. Kazakhstan has also legislatively prohibited their issue and circulation within the country. Uzbek residents cannot purchase cryptocurrencies.<\/li>\n<li>Miners are under close regulatory scrutiny.<\/li>\n<\/ul>\n<\/div>\n<h2 class=\"wp-block-heading\"><b>Kazakhstan<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">In 2020, Kazakhstan&#8217;s President Kassym-Jomart Tokayev <\/span><span style=\"font-weight: 400;\">approved<\/span><span style=\"font-weight: 400;\"> a bill titled &#8220;On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Issues of Regulating Digital Technologies.&#8221; Among the many sectors it covers, the document also addresses cryptocurrencies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to the document, digital assets are recognised as property and cannot function as a means of payment. They are divided into two types \u2014 secured and unsecured.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Cryptocurrencies were classified as the second type. Their issuance and circulation within Kazakhstan are prohibited \u201cexcept where provided by law.\u201d<\/span><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span style=\"font-weight: 400;\">\u201cMore than eight months have passed since the law was adopted, and provisions allowing the issuance and circulation of unsecured digital assets have yet to be defined,\u201d said ForkLog lawyer and tax expert Aydar Masatbayev.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">According to Madi Saken, the association&#8217;s senior coordinator for legislative work at the Blockchain and Data Center Industry Association in Kazakhstan, such an exception could be the Astana International Financial Centre (AIFC), where a special legal regime applies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Last year <a href=\"https:\/\/forklog.com\/en\/news\/kazakhstan-to-launch-cryptocurrency-exchange-with-japanese-investors\"><span style=\"font-weight: 400;\">it was reported<\/span><\/a><span style=\"font-weight: 400;\"> that with the support of Japanese investors, a cryptocurrency exchange was to be launched at the AIFC. However, ForkLog was told by the Centre that the Japanese investors \u201chave not returned with a registration answer.\u201d At the same time, representatives said that a regulated investment AIFC platform for digital assets, QuantDART, has recently gone live.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Minister of Digital Development, Innovation and Aerospace Industry Bagdat Musin said the ministry plans to <\/span><a href=\"https:\/\/kursiv.kz\/news\/finansy\/2021-02\/kazakhstan-nameren-perevesti-1-mirovogo-oborota-kriptovalyut-na-svoi-birzhi\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">to create an institute of cryptocurrency exchanges based on the AIFC<\/span><\/a><span style=\"font-weight: 400;\">. He added that Kazakhstan intends to transfer 1% of the global crypto turnover to its exchanges.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under this proposal, cryptocurrencies mined in Kazakhstan would be traded on local platforms, where each transaction would be taxed, the minister noted.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Taxation of crypto assets in Kazakhstan raises questions due to the general absence of provisions in the republic\u2019s tax legislation that expressly contain the term \u201cdigital asset,\u201d<\/span> Masatbayev says.<\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span style=\"font-weight: 400;\">\u201cAs the tax legislation of Kazakhstan will rely on accounting standards, the digital asset, by virtue of its recognition as property, will be treated as inventory, in accordance with international accounting standards,\u201d he noted.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">Increase in value earned by a Kazakh legal entity and tax resident abroad will be exempt from VAT \u201cby virtue of the territorial nature\u201d of this tax, explains the lawyer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">For individuals who are tax residents of Kazakhstan, the taxation issue is complicated by the fact that \u201cwhen determining their tax obligations, they cannot rely on International Financial Reporting Standards, and tax legislation does not contain provisions to determine property income,\u201d Masatbayev noted.<\/span><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span style=\"font-weight: 400;\">\u201cBecause Kazakhstan&#8217;s tax law will rely on accounting standards, the digital asset, by virtue of its recognition as property, will be treated as inventory under international accounting standards,\u201d he added.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">Mining in Kazakhstan is not banned. The law recognises miners\u2019 ownership of the mined cryptocurrencies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">This provision could hinder \u201cthe development of extensive mining fields\u201d for the extraction of unsecured cryptocurrencies, says the lawyer.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to President Kassym-Jomart Tokayev, Kazakhstan accounts for around 6% of global mining. This is corroborated by data from the Cambridge Centre for Alternative Finance.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to a statement by Minister Musin, there are already <a href=\"https:\/\/forklog.com\/en\/news\/kazakhstan-discussed-700-million-in-cryptocurrency-mining-investments\"><span style=\"font-weight: 400;\">17 mining farms<\/span><\/a>, mining cryptocurrencies worth an amount equivalent to $18-28 million per month. He added that six mining data centres with a total load of 300 MW are being built.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In 2020, authorities said that mining farms had already brought Kazakhstan investments of 82 billion tenge (over $190 million at the rate at the time of writing).<\/span><\/p>\n<p><span style=\"font-weight: 400;\">President Kassym-Jomart Tokayev tasked the government to increase mining investments to 500 billion tenge ($1.18 billion) by 2025.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><b>Kyrgyzstan<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">As of March 2021, regulation of cryptocurrencies in Kyrgyzstan has been introduced only in the taxation of mining.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In June 2020, Kyrgyzstan&#8217;s parliament passed in the third reading a bill \u201cOn Amendments to the Tax Code.\u201d It sets a 15% tax for miners.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">As ForkLog explained to the National Bank of Kyrgyzstan, the taxable base comprises \u201cthe amounts charged for electricity consumed in mining.\u201d In August, the Ministry of Economy presented <a href=\"https:\/\/forklog.com\/en\/news\/kyrgyz-authorities-unveil-reporting-form-for-mining-taxation\"><span style=\"font-weight: 400;\">the tax reporting form<\/span><\/a>.<\/p>\n<p><span style=\"font-weight: 400;\">The law also introduced the concept of a \u201cvirtual asset\u201d and defined it as a digital expression of value. But the legal status of cryptocurrencies is not defined, and regulation is absent, the Central Bank said.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">President Sadyr Japarov, by a separate decree, ordered the government and the National Bank to develop bills regulating the turnover of cryptocurrencies \u201cto create a legal basis for their circulation, protect consumers\u2019 rights and reduce risks.\u201d<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In December the National Bank announced <a href=\"https:\/\/forklog.com\/en\/news\/kyrgyzstans-central-bank-proposes-regulating-cryptocurrency-firms\"><span style=\"font-weight: 400;\">preparation of legal documents for regulation<\/span><\/a><span style=\"font-weight: 400;\"> of cryptocurrencies, and in January published two bills.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The first document <\/span><a href=\"https:\/\/www.nbkr.kg\/contout.jsp?item=56&#038;lang=RUS&#038;material=101407\" target=\"_blank\" rel=\"noopener\"><span style=\"font-weight: 400;\">\u201cOn the Circulation of Cryptocurrencies\u201d<\/span><\/a><span style=\"font-weight: 400;\"> introduces terms \u201ccryptocurrency\u201d, \u201ccryptowallet\u201d, \u201ccryptocurrency exchange operator\u201d and others. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to it, cryptocurrency is regarded as a type of virtual asset, a digital expression of value. It is not a monetary instrument, currency or means of payment, nor does it certify property or non-property rights.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Ownership of cryptocurrency is acquired from the moment of its creation, and also upon entering into and carrying out a deal with it.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">A cryptocurrency transaction is defined as its purchase and sale for the national currency\u2014the som.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Legal entities and individual entrepreneurs are prohibited from making any cryptocurrency deals. The exception comprises market participants \u2014 exchange operators and miners. In addition, the bill regards individuals who conduct operations with cryptocurrencies for their own purposes as market participants.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">They have the right to: <\/span><\/p>\n<ul class=\"wp-block-list\">\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">choose a counterparty among cryptocurrency market participants for cryptocurrency operations;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">open and use bank accounts to conduct cryptocurrency operations;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">set prices for cryptocurrencies at which operations are conducted;<\/span><\/li>\n<li style=\"font-weight: 400;\" aria-level=\"1\"><span style=\"font-weight: 400;\">protect personal data and rights to cryptocurrencies.<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">Crypto exchange operators will be required to obtain a license from the National Bank of Kyrgyzstan. The latter is named as the regulator of cryptocurrency turnover and will maintain a register of exchange operators.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">The second bill \u201cOn Amendments to Certain Legislative Acts in the Field of Virtual Assets\u201d envisages a number of amendments to regulate cryptocurrencies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">It introduces the concept of a \u201cvirtual asset,\u201d including cryptocurrencies and other tokens, into the Civil Code as an object of civil rights. <\/span><\/p>\n<p><span style=\"font-weight: 400;\">In the Tax Code, it is proposed to introduce taxation of services of cryptocurrency exchange operators, analogously to exchange offices, based on a mandatory patent.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In a statement to ForkLog, regulators said the bills are designed to create a legal framework for regulating cryptocurrencies, protect consumers\u2019 rights, comply with FATF recommendations and reduce risks associated with cryptocurrency turnover.<\/span><\/p>\n<h2 class=\"wp-block-heading\"><b>Uzbekistan<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">As early as 2018, President Shavkat Mirziyoyev signed a decree envisaging the deployment of blockchain in public governance and touching on cryptocurrency regulation.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">That same year, a decree on regulating and licensing cryptocurrency exchanges came into force, and in 2019 the National Agency for Project Management under the president of Uzbekistan (NAPU), the regulator of cryptoasset turnover in the country, approved amendments to the licensing procedure.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Under the adopted regulation, activities in the turnover of cryptocurrencies are subject to mandatory licensing by NAPU.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">At the same time, residents of Uzbekistan may conduct exchanges only for sales of cryptocurrencies and tokens, and cryptocurrencies themselves are prohibited from being used as a means of payment or settlement.<\/span><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span style=\"font-weight: 400;\">\u201cThis, at the same time, is linked to the low financial literacy of the population in the new field of cryptoassets,\u201d said ForkLog\u2019s NAPU representative Askar Zakirov.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">For non-residents there are no bans.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In early 2020, the first licensed cryptocurrency exchange, Uznex, was launched. It remains the only such platform in the country.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">NAPU then announced plans to create a regulatory sandbox and a mining-pool to consolidate domestic and foreign miners at the national level.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Since 2019, local miners have been required to pay for electricity under a triple tariff.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">So far, activity in crypto mining in Uzbekistan is not regulated. Regulation is to be defined in a draft regulatory act currently being prepared by NAPU.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In addition to mining, the draft will outline types of platforms, service providers, advertising requirements and other procedures related to the turnover of cryptocurrencies.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">What exactly will be in the bill has not yet been disclosed by NAPU.<\/span><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span style=\"font-weight: 400;\">\u201cThe draft is currently at the stage of coordination with ministries and agencies. After that, it will be uploaded to the portal for public discussion, where everyone can view it and submit proposals or comments,\u201d Zakirov said.<\/span><\/p>\n<\/blockquote>\n<h2 class=\"wp-block-heading\"><span style=\"font-weight: 400;\">***<\/span><\/h2>\n<p><span style=\"font-weight: 400;\">Little is known about legislative initiatives concerning regulation of the cryptocurrency market in Turkmenistan and Tajikistan.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">According to <a href=\"https:\/\/forklog.com\/en\/news\/ukraine-and-russia-lead-chainalysiss-global-crypto-adoption-index\"><span style=\"font-weight: 400;\">Chainalysis analysts&#8217; report<\/span><\/a><span>, both states were among countries with very low cryptocurrency activity.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">One of Tajikistan&#8217;s latest statements regarding cryptocurrencies was made in 2018. Then the regulator linked the use of crypto assets to money laundering and financing of terrorism, and stressed that they are not legal means of exchange or store of value or settlement unit.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Although the legal regime for cryptocurrencies in Tajikistan is not regulated, authorities <a href=\"https:\/\/forklog.com\/en\/news\/tajik-authorities-assess-taxes-on-several-dozen-bitcoin-miners\"><span style=\"font-weight: 400;\">require miners to pay taxes<\/span><\/a>.<\/span><\/p>\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><span style=\"font-weight: 400;\">\u201cThose who tried to investigate unusual cryptocurrency turnover cases in Tajikistan would reach out to the National Bank for explanations and guidance, but returned empty-handed,\u201d local media report.<\/span><\/p>\n<\/blockquote>\n<p><span style=\"font-weight: 400;\">We contacted the central banks of Tajikistan and Turkmenistan for clarification, but as of publication we had not received a response.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Thus, while in some Central Asian countries regulatory frameworks for cryptocurrencies are being laid out and plans to attract through mining millions of dollars are being announced, in others cryptocurrencies have not yet even received definitions and are treated by authorities as tools for fraudsters and terrorists.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Nevertheless, the industry grows and develops daily, which means that the move of cryptocurrencies out of the grey zone in each country is only a matter of time.<\/span><\/p>\n<p><em>Author: Alina Saganiskaya.<\/em><\/p>\n<p>Follow ForkLog news on Telegram: <a href=\"https:\/\/t.me\/forklogfeed\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog Feed<\/a> \u2014 full news feed, <a href=\"https:\/\/telegram.me\/forklog\" target=\"_blank\" rel=\"nofollow noopener\">ForkLog<\/a> \u2014 the most important news and polls.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Central Asia sits at the crossroads of several economic and cultural spaces. The region&#8217;s countries\u2014Kazakhstan, Kyrgyzstan, Uzbekistan, Tajikistan and Turkmenistan\u2014are influenced by developments in China, Europe and, of course, the post-Soviet space. This also concerns cryptocurrency regulation.<\/p>\n","protected":false},"author":1,"featured_media":39199,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"select":"1","news_style_id":"1","cryptorium_level":"","_short_excerpt_text":"","creation_source":"","_metatest_mainpost_news_update":false,"footnotes":""},"categories":[1144],"tags":[153,141,36,1845,2154,1206],"class_list":["post-39198","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-longreads","tag-kazakhstan","tag-kyrgyzstan","tag-regulation","tag-tajikistan","tag-turkmenistan","tag-uzbekistan"],"aioseo_notices":[],"amp_enabled":true,"views":"22","promo_type":"1","layout_type":"1","short_excerpt":"","is_update":"","_links":{"self":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/39198","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/comments?post=39198"}],"version-history":[{"count":1,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/39198\/revisions"}],"predecessor-version":[{"id":39200,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/posts\/39198\/revisions\/39200"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media\/39199"}],"wp:attachment":[{"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/media?parent=39198"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/categories?post=39198"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forklog.com\/en\/wp-json\/wp\/v2\/tags?post=39198"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}