Uzbekistan emerges as Central Asia leader in digital currency adoption

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After years of steadily climbing the leaderboard, Uzbekistan has emerged as Central Asia’s pacesetter in terms of digital currency adoption to rank, surpassing its neighbors Kyrgyzstan and Kazakhstan.

According to a report, Uzbekistan led the region by a close call, climbing 54 places from the previous rankings to occupy the thirty-third spot. Previously, the country had lagged in terms of Web3 adoption to regional powerhouses, but in 2024, fortunes for Uzbekistan flipped.

The surge in adoption was not quick, as the report chronicled a raft of factors that put Uzbekistan on the right path. To start, the removal of the tax burden for digital asset service providers triggered a ripple effect in the local ecosystem, allowing retail and institutional investors to allot more funds in the asset class.

A clear-cut regulatory rulebook for service providers and a licensing procedure laid the foundations for Uzbekistan’s rise in the region. Since coming into effect, over 15 firms have clinched operational licenses in Uzbekistan, a figure comprising international exchanges and local players.

The National Agency for Perspective Projects pegs the total transaction volume from the 15 licensed firms in 2024 at just over the $1 billion mark, an all-time high for the Central Asian nation. For the first time in history, the number of Uzbeks with digital assets soared to 500,000, representing nearly 2% of the population. 

A bird’s eye view reveals that the digital asset ecosystem in Uzbekistan holds promise for the local economy. To date, the nascent sector has contributed $3 million to the state budget in licensing and other ancillary fees, with experts predicting a rise in the figures.

Apart from a friendly government stance, Uzbeks are turning to digital assets for many reasons. The prospects of seamless cross-border transactions with stablecoins appeal to many residents, while others are taking advantage of low fees to ditch conventional payment methods.

One demographic leans on digital assets as a hedge against inflation, and others are mulling the prospect of speculating with digital currencies. Despite the policies, local regulators are strengthening their resolve to crack down on digital asset crime and operations from unregistered firms.

A glance at the new rankings reveals that Central Asia is on an upward trajectory with digital asset adoption, surpassing other regions. While Uzbekistan sits at the top, Kazakhstan comes in a close second, with 8% of its population holding a form of digital asset.

Unlike Uzbekistan, which has strict regulations, Kazakhstan’s regulators are more likely to issue licenses to operators. Currently, the country houses over 100 digital asset exchanges, contributing to trading volumes of over $4 billion in the first six months of 2024.

German companies are not ‘crazy’ about blockchain, focused on AI and cloud computing 

A new report has revealed that German-based enterprises are not going all in on blockchain technology, opting to pitch their tents on other emerging technologies to pursue efficiency and productivity.

According to the study by W3NOW, German companies are increasing the size of their bets on artificial intelligence (AI) and cloud computing over blockchain. The study, a quantitative survey of over 9,000 German-based enterprises, sought the opinion of 200 industry experts to reach its final decision.

Per the study, 72% of respondents disclosed that Web3 solutions did not form part of their near-term strategies for growth. The figure is not dissimilar from 2023’s metrics, with 74% of firms signaling an apathy to DLT from the previous year. 

A close look at the report reveals that German adopters of blockchain are clustered in finance, with banks and payment solutions leading the charge. More than half of financial institutions in Germany have implemented a blockchain solution for settlement or record keeping. This figure is poised to increase in the coming years.

Blockchain’s success in finance is a testament to its maturity in the sector, says one finance expert interviewed by W3NOW. The technology offers a cost-effective alternative to traditional options while providing immutability and transparency perks for financial institutions.

Besides finance, blockchain application is inching forward in digital identity circles, with 31% of surveyed firms already experimenting with Web3 solutions. The survey noted that 23% of firms are about to take the plunge to roll out blockchain-based identity solutions for the German market. 

The report identified adoption in marketing, copyright and license management, supply chains, and gaming industries. Going further, a few outliers are relying on blockchain to improve the state of their services in energy management and data handling, particularly in healthcare.

While the enterprise application of blockchain is faltering, a sizable number of German firms are holding digital assets, with BTC leading the charge. The bulk of enterprises see the asset as an investment vehicle, while nearly 50% see the upsides of leaning on digital assets for peer-to-peer (P2P) payments.

A trust problem

The report notes that blockchain suffers from an image problem in German society, given the spate of scams, frauds, and inherent volatility in the ecosystem. 

“This negative media coverage makes it difficult to build trust in blockchain solutions and to position the technology as a versatile and secure foundation for a wide range of applications,” read the report.

To trigger greater adoption metrics, the paper calls for greater collaboration between the government, the private sector, and academia to sensitize the public to the transformative benefits of blockchain.

However, mainstream adoption among enterprises may be an uphill climb due to the craze for AI models and cloud computing in recent months.

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