The government of Uzbekistan in collaboration with the Korean Blockchain Business Association (KOBEA) has issued a memorandum of Understand (MoU) to develop the country’s government-licensed crypto exchange which is the first of its kind. This consequently translates into the license for crypto mining centers and ICOs.
Under the authority of the President of the Republic of Uzbekistan,Shavkat Mirziyoyev, who had signed a decree to support the integration and advancement of cryptocurrency and blockchain technology in the economy earlier in the year, the country’s National Agency of Project Management (NAPM) has been able to secure a partnership agreement with KOBEA owing to the country’s interest in cryptocurrency and its bedrock technology, blockchain. A successful proceed from this partnership might facilitate the growth of the emerging sector and also secure a space for the country in the gathering of pro-cryptocurrency countries around the world.
The government of Uzbekistan in years to come has committed itself to allocation a significant chunk of the country’s resources into the establishment, growth and regulations of the innovative startups and projects in the Fintech technology sector such as Artificial Intelligence (AI), Distributed Ledger Technology (DLT), virtual currencies and the blockchain technology.
Reasons for the Decision
Uzbekistan experienced a major economic turnaround in 2012 when it was officially delisted as a Specially Designated Global Terrorist under Executive Order 13224. This order opened doors to an influx of individuals and businesses in the United States to embark in financial transactions with companies as well as financial institutions in the country. This single order has made growing bilateral relationships possible for the country and other countries in the world, and this has further boosted its economy.
It is possible that if not for the 2012 Order, Uzbekistan might be facing the same plight as Iran and Turkey this year as these countries have been slammed with economic sanctions by the United States, although these sanctions have left a detrimental impact on the countries’ economy and devaluation of the country’s fiat currency. However, it has been beneficial to the cryptocurrency ecosystem as it increased the demand for cryptocurrency in the country which seems as though the only feasible way out of this economy hardship accompanying the sanction.
However, it is crystal clear that the country’s strides toward a pro-cryptocurrency government have nothing to do with its relationship with the United States and the current financial status of the country based on the fact that the country, unlike Iran and Turkey, is free from sanction both from the United States government and the European Union.
Uzbekistan Strides Towards Pro-cryptocurrencies
Uzbekistan government from within the National Agency of Project Management (NAPM) have revealed that the government has decided to follow the position of leading countries in the pro-cryptocurrency categories by creating an enabling environment for crypto startups after considering the success of those leading countries such as Malta and Switzerland’s Zug. The recorded success of these places has been achieved by luring blockchain-related businesses with an attractive legal framework.
The EU country, Malta, which is popularly tagged as a “blockchain Island,” has welcomed three multi-billion dollar corporations which relocated their headquarters to its jurisdiction owing to its favorable virtual currency police in operation there.
Crypto firms such as Revolut and Binance have permanently relocated its headquarters in Malta, this has led to an influx of professionals in their hundreds which are employees of this companies, and this further translates into hundreds of millions of dollars in monthly profit in the region. Also, a major project, Tron is speculating to relocate to the region in a few months’ time.
It’s a thing to be in the list of pro-cryptocurrency category, and it is another to be able to stand where counties such as; Malta, South Korea’s Busan, Jeju Island, Switzerland, and other major crypto markets are or even compete with them. The Uzbekistan government seems prepared for this project as it has started planning to establish large-scale research and development centers with a mining town in Chorvoq and efficient banking relations for virtual currencies exchange.
Pro-Cryptocurrencies Policies Sufficient?
Countries such as The Philippines, South Korea, Malta, Switzerland, Singapore, Thailand, and many others have been innovative enough to establish a cryptocurrency-friendly legal framework in which the businesses and startups of virtual currency from mining to trading has perfectly thrived. The question now is, for new countries that want to follow in this steps, will pro-cryptocurrency policies be sufficient?
The answer is a capital “No” as merely imposing practical legal framework will not be enough to lure multi-billion dollars companies and otherwise to the county o the rounds that they are based in regions where there are vibrant crypto communities.
In addition to crypto-friendly regulatory policies, the government will have to take more practical actions towards the various aspect of the virtual currencies market including Initial Coin Offerings (ICO), trading, mining and development before large-scale institutions can consider Uzbekistan on possibilities of having a branch in the country. However, this might still constitute a secondary option to these institutions.
With the way Malta rapidly grew, there seems to be a possibility for the crypto sector of evolving as it might also develop into a competitive capacity with other giants in Asia and Europe though might take months or even years. The primary element which will determine the country’s position in the crypto ecosystem in few years is the enthusiasm, effort, and commitment the government will be contributing to the NAPM project as it has requisite tendencies in making the country the next emerging technology hub in Central Asia.
This policy by the Uzbekistan government is worthy of emulation by other countries of the world wishing to emerge as a tech hub. Although other countries, as well as Uzbekistan, would be needing more than crypto-friendly policies as other practical steps such as tax reduction (a culture imbibed by some countries) and adoption of the blockchain technology into the fabrics of its government and additional practical step would be sufficient for the desired growth.