The president issued an order in February, and now that decree is official.
Uzbekistan hasn’t always been a fan of blockchain technology and cryptocurrencies, previously referring to them as “instruments of terrorism financing.” However, in February, things started to change: President Shavkat Mirziyoyev tapped on the Central Bank, the Ministry of Information Technologies and Communications, the Finance Ministry, and the Ministry of Economy to take charge of an initiative to develop a regulatory framework for cryptocurrency activities.
And now that order has materialized. Decree №ПП-3832, titled, “On measures for the development of the digital economy in the Republic of Uzbekistan,” has been signed by the president and is now in force.
The decree acknowledges blockchain, cryptocurrencies, artificial intelligence, and supercomputers as major aspects of digital development that the world is pursuing. The decree covers cryptocurrency activities including smart contracts and mining.
Under the decree, trading and companies that operate any cryptocurrency activities are required to apply for licenses. While some may frown on this, this would actually provide consumers with better protection. Additionally, transactions will not follow the traditional regulations governing fiat. And most interestingly, cryptocurrency transactions will not be taxed.
“The turnover of crypto assets is regulated by special regulatory legal acts. Operations related to this turnover are not subject to be taxed, while the revenues received are not included to the tax base,”they wrote.
The tax break is sure to attract businesses and traders alike. Additionally, if the country succeeds in stabilizing electricity flow to rural areas (blackouts are frequent despite abundance of supply), this could have even bigger implications for mining since it is the largest electricity producer in Central Asia. Currently, Uzbekistan already holds the third rank in terms of lowest mining cost per bitcoin, which means it can easily become a hotbed for cryptocurrency miners.
The National Agency for Project Management and Ministry for Development of Information Technologies and Communications will be overseeing licensure and blockchain development programs until 2020. And by 2021, government agencies will adopt blockchain tech for identity systems and transactions. A blockchain center to focus on innovation and opportunities is scheduled to start this month, and a full regulatory framework is set to be released by September this year.
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