Uzbekistan, a landlocked sovereign state in central Asia, recently announced that it wants to encourage cryptocurrency exchanges to set up their operations within its borders. The nation’s government and its president, Shavkat Miromonovich Mirziyoyev, have also decided not to impose taxes on income generated from crypto-related transactions.
The notice further stated that digital currency exchanges operating in Uzbekistan need not comply with the country’s foreign currency regulations, meaning that they may accept deposits and withdrawals in foreign fiat currencies with limited regulatory restrictions. Moreover, crypto exchanges in Uzbekistan do not have adhere to its securities and exchanges regulations, the president’s order stated.
$700,000 Minimum Starting Capital
In order to conduct crypto-related business in the democratic republic, foreign companies first have to establish a subsidiary in Uzbekistan. Crypto firms must also have at least 30,000 times the nation’s average monthly ($700,000) in starting capital before applying for a license, the order noted.
Other requirements mentioned in the notice include following anti-money laundering and know-your-customer (AML/KYC) guidelines. Specifically, crypto exchanges in Uzbekistan must have a database that accurately tracks and records users’ transactions and their personal information.
All servers and data managed by digital currency exchanges must physically reside in Uzbekistan, the government order noted. Moreover, the nation’s government officials have been instructed to allow cryptocurrency miners using over 100 KWh of electric power to acquire property for their operations without going through an auction. Normally, property owners in Uzbekistan have to acquire land via a government-controlled auction.
Blockchain Development Fund
Notably, this cryptocurrency-related order has been issued by Uzbekistan’s government after it announced in February that the nation’s financial regulators were working on developing cryptocurrency regulations. The announcement from February also said that the republic’s government was planning to launch a state-backed blockchain innovation center in Tashkent, the capital of Uzbekistan.
It now appears that the nation’s government has followed through on its plans as its order noted that a blockchain development fund called “Digital Trust” will be launched. According to the document posted on Uzbekistan’s official government website, the funds from Digital Trust will be directed toward state-led healthcare, education, and cultural projects.
The document further noted that the country’s blockchain development fund would help establish an organization focused on attracting foreign investments to Uzbekistan’s fintech sector. Digital Trust will reportedly be funded primarily by the country’s National Agency of Project Management and various other international loans.