The president of Uzbekistan, Shavkat Mirziyoyev, has signed a decree that will support the integration and advancement of cryptocurrency and blockchain technology in the country. At a time when many economies have become hostile to digital currencies, Uzbekistan is taking steps to become a leader in the field. The Uzbek government wants the nation to take a pioneering role in cryptocurrency and blockchain technology.
The decree was tagged “On measures for digital economics development in the Republic of Uzbekistan.’’ The objective of this decree is to modernize state administration system and to improve digital economics toward building a digital economy that welcomes blockchain technology and the mining, trading, issuance, and adoption of cryptocurrencies. This will also include the development of a legal framework to recognize and legalize the blockchain and crypto sector.
The decree also outlines a hugely favorable tax position for the cryptocurrency sector. All profits earned from cryptocurrency firms will be tax-free. According to the order from the government:
“The operations of legal entities and individuals related to the turnover [transactions] of crypto-assets, including those carried out by non-residents, are not taxable, and the revenues received from these transactions are not included in the base [foundation] for taxes and other mandatory payments.” “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.”
These developments will benefit regulated companies and individual investors alike. Also, entities that wish to do business in the field of digital assets, including the operation of crypto exchanges, will have to acquire exclusive licenses.
Some notable proposals from the official document include:
- Adopting and developing the cryptocurrency sector including mining, issuance, distribution, insurance and crowd-funding activities.
- Training qualified personnel on how to develop and explore blockchain technology in the public administration sector.
- Having extensive coordination with international authorities and economies in the digital currency market as well as the blockchain technology.
- Issuing proper legal guidelines and framework to embrace the blockchain technology.
The decree entails the creation of suitable conditions to introduce “digital economics,” in the country and several government sectors have been tasked with coming up with a concrete and appropriate framework for implementing blockchain technology by 2020. By January 1st, 2021, blockchain technology is expected to have been fully incorporated into the government’s data infrastructure according to the plan.
Uzbekistan Moving in the Right Direction
With this decree, Uzbekistan is now among the earliest countries to legally recognize and embrace the digital currency and blockchain technology sectors. The nation already announced in February 2018 that it will publish its plans to regulate blockchain and cryptocurrency come September 2018 and also a “Blockchain skill center” will begin operations in July. This resource center will formulate conditions for the utilization of blockchain’s potential, expanding proficient capacity and supporting local designers in its take-up.
The Uzbek government also publicized its intention to use the cheap electricity sourced from Uzbekistan’s formidable hydroelectric infrastructure to mine virtual currencies. Hydroelectric power providers such as JSC Uzbekenergo and Uzbek Hydro Energo will be tasked with initiating a three-month pilot program to test the effectiveness of mining virtual currencies.