Tuesday, October 4, 2022

Uzbekistan Establishes Regulatory Framework For Crypto, Appoints Oversight Agency

Crypto enthusiasts in Uzbekistan may now have something to cheer about, as President Shavkat Mirziyoyev finally puts forward a clear-cut regulatory framework within which the country’s crypto industry will operate henceforth. Additionally, the government also set up an agency (Perspective Projects Agency), that will act as watchdog over the industry.

How Uzbekistan Plans To Mitigate Against Illicit Use of Crypto

It should be noted that the fast-tracked manner by which Uzbekistan has come up with this regulatory framework, has a lot to do with the government’s fears regarding criminal uses of crypto. In fact, that may be exactly what informed Mirziyoyev’s  recently-published directive to that effect.

According to the April 27 directive, all crypto exchanges, mining pools and private crypto holders are required to register locally. That is of course, if they intend to continue operating from within the Central Asian republic.

Furthermore, a part of the document also claims that by Jan. 1, 2023, Uzbekistan residents will be able to start trading crypto. Although, they will only be able to do so, on any of the local exchanges. But there’s an obvious rationale behind these directives. From all indications, Uzbekistan wants its residents to sell and buy crypto only on local exchanges because of one reason. And that’s nothing other than its assurance that those exchanges must have carried out due diligence and KYC verification of their users’ identities.

Perspective Project Agenciy Tasked With Oversight Duties

Meanwhile, the Perspective Project Agency has also been restructured and saddled with new responsibilities. Formerly known as the National Agency for Project Management, the PPA must come forward with new crypto policies. This is to ensure that bad actors do not succeed in using crypto to launder money or even fund terrorism.

Interestingly, the regulatory framework also confirms that there will be a grace period of not more than 3 years for crypto projects. That is, during that period, projects can continue to operate without a license. However, by the end of this grace period, projects must have sought approval by conforming to regulation requirements. And failure to do so, will mean that such projects would have to cease operations and shut down eventually.

Meanwhile, crypto miners are not left out from the directives either. According to the regulatory framework, all firms involved in mining operations must strictly adhere to using only solar energy to carry out their operations.

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