As Azerbaijan moves closer to establishing a full legal framework for virtual assets by the end of 2025, questions surrounding taxation, regulatory oversight, and institutional involvement are becoming increasingly urgent. The rapid global expansion of the cryptocurrency industry has underscored the need for clear regulations, investor protection, and a transparent market environment-issues that remain at the center of public and expert debate in the country.
To shed light on the current status of the draft legislation, the prospects for tax reforms, and the reasons major financial institutions have not yet entered the local crypto market, The Caspian Post spoke with Elnur Guliyev, Director of Crypto Consulting MMC, head of the Kriptoinvest.az platform, and lecturer at the UNEC Business School.
In this interview, Guliyev offers an in-depth analysis of the regulatory landscape, outlines potential risks and opportunities for investors, and explains what steps Azerbaijan must take to build a modern, secure, and competitive cryptocurrency ecosystem.
- What is the current status of the legislation expected by November 2025, and which provisions are already complete?
- The development of the legislative framework falls under the authority of the Central Bank, and it was expected to be finalized by the end of 2025. At this stage, there is no precise or publicly available information about the document’s specific provisions.
photo: datawallet
- Which institutions and working groups are involved in the preparation process? What are the roles of the Central Bank and the Ministry of Economy?
- The Central Bank is one of the authors of the draft law and also oversees the supervisory and sandbox mechanisms for virtual assets.
- Should separate, special tax rules be developed for cryptocurrency operations in Azerbaijan, or are the current regulations sufficient?
- In my opinion, it is more appropriate to introduce separate, specialized tax rules for cryptocurrency transactions. Although the existing regulations are somewhat adequate, a dedicated regulatory framework tailored to the specifics of the sector would improve tax discipline and create a more reliable and transparent environment for investors. Implementing a fair and objective tax mechanism will have a positive effect on the behavior of individual investors engaged in cryptocurrency activities.
photo: banco.az
If tax mechanisms are implemented in a strict and burdensome way for investors, some citizens may suspend their activities or move their operations to foreign platforms in the short term. However, international experience shows that when a transparent legal framework and a balanced tax policy are adopted, it actually helps legitimize the market and attracts more investors.
The main goal in Azerbaijan is not to penalize investors, but to bring them into a legal framework and generate additional revenue for the state budget. If reforms are introduced gradually and based on fair and clear rules, we will see long-term growth in the country’s cryptocurrency market.
- Will the implementation of tax reforms reduce the number of individuals investing in this field within the country?
- Tax reforms may naturally influence the behavior of individuals investing in cryptocurrencies. If the mechanisms are implemented in a strict and burdensome way, some citizens might halt their activities or shift their operations to foreign platforms. However, international experience shows that a transparent legal framework and a balanced tax policy do the opposite - they legitimize the market and attract more investors.
photo: APA
In Azerbaijan, the goal is not to punish investors, but to bring them into a legal framework and secure additional revenue for the state budget. If reforms are introduced gradually, fairly, and transparently, they will have a positive rather than negative impact on the development of the cryptocurrency market.
- What are the main reasons why large corporations have not entered the cryptocurrency sector in Azerbaijan?
- It is not surprising that major financial institutions in Azerbaijan have not entered the cryptocurrency sector, as the system still resembles a “dance floor full of gaps”: the music is playing, but the official rules are missing.
There are several key reasons why large financial institutions have not entered the crypto market in our country.
photo: Bitcoin.com
The first factor is the uncertainty of the regulatory framework. A fully established legal base for cryptocurrencies does not yet exist, which means banks and investment firms lack clear permissions or prohibitions. No major financial institution is willing to risk its reputation in a legal vacuum.
Secondly, the Central Bank and the Financial Monitoring Service still do not recognize cryptocurrencies as an “official financial instrument.” As a result, AML/KYC requirements, reporting standards, and tax mechanisms remain undefined. This becomes a major “risk portfolio headache” for large investors and raises concerns about legal and financial security.
The third factor is Azerbaijan’s conservative financial policy. The financial sector prioritizes stability over innovation. For banks, the priority is not crypto but “minimizing risk.” There is interest in the future of the technology, but the general approach remains: “let someone else take the first step.”
