The President of Uzbekistan, Shavkat Mirziyoyev, has declared that cryptocurrency is legal, and has announced some initial regulations for trading and mining crypto. A new set of laws specifically for crypto are going to be developed by the government, which has decided not to use existing securities laws for crypto. One positive thing right off the bat is it appears Uzbekistan will not be taxing crypto revenue.
Uzbekistan is a nation in Central Asia with roughly 33 million people, about 10% the population of the United States. A review of Bitcoin legality by country on Wikipedia reveals that Uzbekistan had no laws whatsoever regarding cryptocurrency, meaning up until now, anything involving crypto was allowed.
Therefore, even though the legalization of crypto in Uzbekistan sounds positive, it actually means this is the beginning of regulations that will make some crypto activity illegal. Kyrgyzstan is the only neighboring country which has legalized crypto activity. This lack of regulation in the region probably indicates that crypto activity has been low in the region and is just now increasing to the point that laws are needed.
The Presidential decree specifically legalizes crypto exchanges. Apparently, crypto exchanges have already been operating in the country, but now they must obtain a license. The National Agency for Project Management will issue crypto exchange licenses and monitor crypto exchanges for criminal and terrorist activity. Crypto exchanges will be required to have a reserve of 30,000 “minimum wages” to get a license but it is unclear how much money this is. A monthly minimum wage in Uzbekistan as of 2017 was USD 185 and if this is the right number, then exchanges need over USD 5 million of reserves to operate. Additionally, crypto exchanges will have to host their site on servers in Uzbekistan and must keep all transaction and know your customer (KYC) data in storage for five years.
The decree briefly mentions crypto mining and states that crypto farms over 100 KW will have to purchase designated real-estate from Uzbekistan’s state energy companies.
Although these new laws may open up Uzbekistan crypto users to legal violations, backing up and looking at the broader picture, it is positive that the country has decided to regulate cryptocurrencies instead of outright banning them.
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