Uzbekistan Legalizes Cryptocurrency
In a landmark decision, the government of Uzbekistan has given a thumbs-up to the promising cryptocurrency industry. The President of Uzbekistan, Shavkat Mirziyoyev has signed a memorandum of understanding (MoU) with the Korean Blockchain Business Association (KOBEA) which now allows use of cryptocurrency and establishment of Uzbekistan’s first government-licensed crypto exchange. This move has come in as part of the government’s various efforts to augment its market-based economy.
As per the decree titled ‘On Measures to Organize the Activities of Crypto-exchanges in Uzbekistan’, crypto activity will not be treated as securities and therefore, the existing legislation for securities and other traditional exchanges will not be applicable. All bitcoin exchanges and activities of crypto trading platforms will be subject to a new set of normative acts developed for digital assets.
However, crypto-exchange licensing will be limited only to foreign legal entities which have already established a subsidiary or other enterprise in Uzbekistan. To lure investments, the government has also offered firms tax exemption on all their cryptocurrency turnovers. Also, licensed exchanges with cryptocurrencies and foreign fiat currencies would not be regulated by the current foreign currency rules.
The licensing regime for aspiring crypto trading platforms comes with certain terms and conditions, mentioned as below:
- They must have an authorized capital equivalent to 30,000 minimum wages on the day they apply. And 20,000 minimum wages are required to be reserved in a separate account with one of the country’s commercial banks.
- Their servers must be located in Uzbekistan.
- The platforms need to adhere to the statutes for trading and publish exchange rates based on the demand-supply ratio.
- For 5 years, they will have to save information regarding their transactions, users’ identification and other related data.
- The presidential decree allows crypto startups to organize, exchange transactions with residents and non-residents. These transactions can involve the acquisition and/or alienation of crypto assets in exchange for the national and international fiat currencies, as well as the exchange of certain cryptocurrencies with other digital coins.
Mirziyoyev’s ordinance also legitimizes cryptocurrency mining and has asked state-controlled energy firms to allocate land for mining operations which would utilize over 100 KW/h of power on locations designated by the National Project Management Agency.