- Cryptocurrency adoption is growing rapidly across Central Asia and the Caucasus, with Uzbekistan leading the region in adoption rates.
- Uzbekistan ranks 33rd globally, with 1.5% of its population (approximately 512,000 people) owning cryptocurrency, and its licensed exchanges processed over $1 billion in transactions in 2024.
- Kazakhstan, once a global leader in Bitcoin mining, has seen its mining operations decline due to government regulations, though adoption remains significant.
- Georgia leads the Caucasus in crypto adoption, ranking 54th globally, while Armenia and Azerbaijan trail behind at 77th and 92nd, respectively.
- Kazakhstan introduced a central bank digital currency (CBDC) in 2023 to compete with cryptocurrencies, reflecting a dual approach of regulation and innovation.
- The report highlights the region’s evolving crypto landscape, shaped by regulatory shifts, energy challenges, and growing public interest.
Uzbekistan: A Regional Leader in Crypto Adoption
Uzbekistan has emerged as the undisputed leader in cryptocurrency adoption across Central Asia, with 1.5% of its population—roughly 512,000 individuals—owning digital assets. This marks a significant leap for the country, which ranked 87th globally just two years ago. By 2023, Uzbekistan had climbed to 25th place before settling at 33rd in 2024. Despite this slight decline, the country remains far ahead of its regional peers in embracing crypto assets.
The rapid growth of Uzbekistan’s crypto ecosystem is supported by a robust infrastructure of 15 licensed cryptocurrency exchanges and outlets, which collectively processed over $1 billion in transactions in 2024. This level of activity underscores the increasing integration of digital assets into the country’s financial system. However, the government’s regulatory framework has played a pivotal role in fostering this growth, creating a relatively stable environment for crypto enthusiasts and businesses alike.
Kazakhstan: From Mining Hub to Regulatory Overhaul
Kazakhstan’s relationship with cryptocurrency has been a tale of two extremes. In 2021, the country became a global hub for Bitcoin mining, accounting for over 27% of the world’s Bitcoin hashrate after China’s crackdown on mining operations. This surge in activity, however, came at a cost. The country’s electricity grid struggled to cope with the immense power demands of mining operations, leading to widespread power outages and public discontent.
In response, the Kazakh government introduced stringent measures to curb crypto mining, including steep tariffs on energy consumption and tighter regulations. These efforts led to a dramatic decline in the country’s Bitcoin hashrate, which fell to just 4% by May 2023. The number of mining operations also plummeted, dropping from 330 in 2021 to just 26 by mid-2023. However, the sector has shown signs of recovery, with the number of mining outfits rising to 51 over the past 15 months. This resurgence suggests that while the government’s policies have reshaped the industry, they have not extinguished it entirely.
Kazakhstan’s Dual Approach: Regulation and Innovation
While Kazakhstan has taken steps to limit the environmental and infrastructural impact of crypto mining, it has also embraced innovation in the digital asset space. In late 2023, the country introduced a central bank digital currency (CBDC) designed to compete with cryptocurrencies. This move reflects a broader strategy to maintain control over the financial system while capitalizing on the growing interest in digital assets.
The introduction of the CBDC also coincided with new regulatory measures aimed at improving transparency in crypto transactions. These changes have allowed the government to better monitor the flow of digital assets, reducing the risk of illicit activities. By balancing regulation with innovation, Kazakhstan is attempting to position itself as a leader in the evolving global crypto landscape, even as it grapples with the challenges posed by its mining sector.
The Caucasus: Georgia Leads, But Faces Challenges
In the Caucasus region, Georgia stands out as the leader in cryptocurrency adoption, ranking 54th globally. This position, however, represents a decline from its 37th-place ranking in 2022. Despite this drop, Georgia remains a significant player in the crypto space, thanks in part to its favorable regulatory environment and growing public interest in digital assets.
Armenia and Azerbaijan, on the other hand, lag behind in global rankings, coming in at 77th and 92nd, respectively. While both countries have seen some growth in crypto adoption, they have yet to develop the infrastructure and regulatory frameworks needed to compete with regional leaders like Georgia and Uzbekistan. Nevertheless, the increasing global interest in digital assets suggests that these nations could see further growth in the coming years.
Uzbekistan’s Rise and Regional Comparisons
Uzbekistan’s rapid ascent in global crypto rankings highlights the country’s proactive approach to fostering digital asset adoption. By creating a supportive regulatory environment and licensing exchanges, the government has enabled the crypto market to flourish. In contrast, neighboring countries like Kazakhstan and Kyrgyzstan have struggled to keep pace, ranking 57th and 76th globally, respectively. Tajikistan and Turkmenistan, meanwhile, remain largely absent from the global crypto landscape, reflecting a lack of infrastructure and public interest.
The report also underscores the unique challenges faced by each country in the region. While Uzbekistan has focused on adoption and infrastructure, Kazakhstan has had to balance its role as a mining hub with the need to address energy shortages and environmental concerns. These differing approaches highlight the diverse ways in which Central Asian nations are navigating the complexities of the crypto market.
The Future of Crypto in Central Asia and the Caucasus
The cryptocurrency landscape in Central Asia and the Caucasus is evolving rapidly, driven by a mix of public interest, regulatory changes, and technological innovation. Uzbekistan’s leadership in adoption rates and Kazakhstan’s efforts to regulate and innovate demonstrate the region’s potential to become a significant player in the global crypto market. However, challenges such as energy constraints, regulatory uncertainty, and uneven adoption rates remain significant hurdles.
As the global crypto market continues to grow, the countries of Central Asia and the Caucasus will need to adapt to stay competitive. Whether through fostering adoption, improving infrastructure, or introducing innovative solutions like CBDCs, the region has the opportunity to shape its own path in the digital asset revolution. For now, Uzbekistan’s rise and Kazakhstan’s dual approach serve as compelling examples of the opportunities and challenges that lie ahead.
