Central Bank of Azerbaijan submits draft crypto law for review
A proposed virtual asset law could establish clearer rules for cryptocurrency businesses operating within Azerbaijan’s domestic market.
Azerbaijan has moved closer to regulating its cryptocurrency sector after the Central Bank completed a draft law on virtual assets and crypto markets and submitted it to state authorities for review.
Fidan Tofidi, Director of the Central Bank’s Financial Technologies and Innovations Department, said the legislation could be adopted before the end of the year. She described the framework as a major step for a sector that has so far remained unregulated in the country.
The proposed regime is expected to introduce licensing and supervision for virtual asset service providers operating in Azerbaijan. Regulators have previously said the framework should cover virtual asset markets and the activities of companies providing crypto-related services.
The initiative is part of Azerbaijan’s broader financial-sector development agenda, which includes work on virtual assets, shared know-your-customer mechanisms, supervisory technology and digital financial infrastructure.
Earlier Central Bank discussions on virtual assets focused on regulatory and supervisory approaches, market risks and opportunities, and the experience of countries such as Kazakhstan and Türkiye.
Azerbaijan has also tested crypto-related projects through its regulatory sandbox. One pilot involved a platform for buying, selling, exchanging and storing virtual assets, although the project was suspended after failing to achieve expected test results.
The Central Bank has maintained a cautious stance on a possible central bank digital currency, saying it is monitoring international developments before moving forward.
Why does it matter?
Azerbaijan’s draft law signals a shift from a legal grey area towards formal oversight of crypto markets and virtual asset service providers. Licensing and supervision could give regulators more visibility over market activity, strengthen consumer protection and help address money-laundering and terrorism-financing risks. The move also reflects a wider trend among emerging markets: rather than banning crypto outright, authorities are building frameworks to integrate digital assets into regulated financial systems.
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