A new presidential decree legalizes cryptocurrency trading in Uzbekistan, introducing licensing for crypto exchanges and a set of requirements they will be obliged to meet. To operate in the country, foreign trading platforms will have to establish local subsidiaries and abide by the country’s relevant laws.
Uzbekistan’s President, Shavkat Mirziyoyev, has signed a decree legalizing the activities of cryptocurrency exchanges, local and regional media reported. The document introduces a licensing regime for trading platforms as well as a number of requirements they need to meet in order to be allowed to operate in the Central Asian country. It comes after an earlier decree issued in July prepared the legal grounds for regulating crypto-related activities.
The decree “On measures to organize the activities of crypto-exchanges in Uzbekistan”, № ПП-3926 from September 2, states that an organization which provides an electronic platform for the exchange, purchase and sale of crypto assets is recognized as crypto exchange in Uzbekistan. The legal document defines ‘crypto assets’ as a set of records in a blockchain that has value and owner.
According to the text, the circulation of these assets and the activities of the crypto trading platforms will be regulated with special normative acts and won’t be covered by the legislation that currently applies to securities and the activities of traditional exchanges.
Monitoring, in terms of compliance with the rules on combating the legalization of proceeds from criminal activities and terrorism financing will be conducted by the licensing body, the National Agency for Project Management under the President, and other relevant state institutions. The decree also notes that the license for conducting crypto-exchange activities will be issued only to foreign legal entities which have established subsidiaries or other enterprises in Uzbekistan.
Another important aspect is that the operations of corporate entities and private persons, including non-residents, related to the turnover of cryptocurrencies are not subject to taxation. Revenues received as a result of these transactions will not be included in the base income used to calculate taxes and other mandatory payments.
Specific Requirements for Trading Platforms
The presidential decree contains a list of mandatory requirements that companies applying for a license to trade cryptocurrencies in Uzbekistan are obliged to meet. They must have an authorized capital equal to at least 30,000 minimum wages on the day of the filing of the application. The equivalent of 20,000 minimum wages has to be reserved in a separate account with one of Uzbekistan’s commercial banks. It’s unclear whether the document is referring to monthly or daily salaries. According to Trading Economics, in 2017 the minimum monthly wage in the country reached 1,453,200 UZS (~$185 USD).
The applicants are required to have built an operational electronic crypto-trading system using servers located in the Republic of Uzbekistan. The platforms will have to adopt rules for trading and publish exchange rates based on the ratio between supply and demand. They will be obliged to store for a period of five years information about all transactions, users’ identification data and other materials related to their interaction with customers, including business correspondence.
Crypto exchanges in Uzbekistan will be allowed to receive remuneration for their services and determine procedures for charging fees. Their operators will be able to organize exchange transactions with residents and non-residents. According to Mirziyoyev’s decree these transactions can involve the acquisition and/or alienation of crypto assets in exchange for the national and foreign fiat currencies, as well as the exchange of certain cryptocurrencies with other digital coins.
The resolution of Uzbekistan’s head of state also briefly mentions cryptocurrency mining. According to the document, the state-controlled energy companies, “Uzbekenergo” and “Uzbekgidroenergo”, will be allocating land plots for industrial-scale mining operations using over 100 KW/h of electricity without holding auctions. These locations will be designated in coordination with the National Project Management Agency under the President’s administration.