Uzbekistan Approves Crypto Trading for Foreign Companies, Cuts Off Taxes
In Uzbekistan, a new presidential resolution has become law regarding the regulation and licensing of cryptocurrency exchanges. According to a document ”On the measures of cryptocurrency exchange establishment in the Republic of Uzbekistan,” a crypto exchange must be considered a legal entity that offers an electronic platform for ”exchange, buy and sell operations with crypto tokens.” The coins themselves are classified as ”a set of blockchain records that have value.”
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No Domestic Exchanges Allowed in Uzbekistan
The resolution states that only legal entities from other countries can apply for a crypto exchange license. However, in order to operate, the exchange platforms will have to store the information on servers in Uzbekistan and open an affiliate company there.
In case the government requires data, entities will have to store five years of user data — log archives: chats, payment information, IDs, and more. Responsibility for monitoring the crypto exchanges lie with the entity that provides government licensing services.
Are There Any Bright Sides to the New Regulation?
According to the new law, private and legal entities within the country can exchange coins, and buy or sell them freely. Any private deals are not subject to taxation. Also, coin conversion operations are no longer subject to equities and bonds regulations, and any dollars gained as a result of cryptocurrency trading will not fall under foreign currency earnings taxation.
Foreign companies that establish digital asset exchanges within the country are temporarily free from paying taxes, although the region is famous for its relatively strong fiscal appetite — and blatant corruption. One local crypto journalist, ”D. R.”, speculated that officials would continue asking for bribes even when working with external businesses.
As for private deals, by using convenient services like LocalBitcoins in Uzbekistan to buy or sell bitcoins, you do nothing wrong and can continue with a clean conscience. It’s a positive that LocalBitcoins’ servers are situated abroad, yet using the service is not restricted.
Additional Requirements and Rules
The new resolution doesn’t specify the exact amount of capital reserves required for the license, only that potential exchanges need to have put aside 30,000 in unspecified “minimum wages” to be greenlighted for operations in the country. The document does clarify that a two-thirds portion of this reserve capital will be put in an account at one of the country’s commercial banks, and that the exchange platforms applying for a license should prepare a set of Know Your Customer (KYC) rules to combat money laundering and criminal financing.
Back in July 2018, Uzbekistan President Shavkat Mirzieev signed the act dedicated to enabling blockchain technology as a tool of government control. The act also refers to a problem with the juridical obscurity of mining, smart-contracts and tokens. To address mining issues, the new law allows for industrial mining (over 100 kW/h) to take place in equipped territories. They fall under the supervision of ”AO Uzbekenergo” and permission is given avoiding the standard tender auction.
Wil Uzbekistan attract more crypto businesses in near future? Lets us know in the comments section below.
Images via Jeff Fawkes, Pixabay