Uzbekistan’s National Agency for Prospective Projects (NAPP) is working on new crypto mining and token issuance regulations, licensing crypto service providers, and collaborating with law enforcement agencies.
Uzbekistan, a Central Asian country with a population of over 33 million, is preparing to introduce new rules for the crypto industry.
The country’s main regulator for crypto matters, the National Agency for Prospective Projects (NAPP), is developing a framework for crypto mining and token issuance, as well as licensing crypto service providers, and collaborating with law enforcement agencies.
NAPP’s Role and Responsibilities
NAPP is an organization that was established in 2018 by a government directive to oversee the development and regulation of the crypto sector in Uzbekistan.
The agency has a staff of 45 officials and is responsible for issuing licenses to crypto-related firms, such as exchanges, mining pools, and token issuers.
NAPP also monitors the compliance of these firms with the existing laws and regulations and identifies suspicious transactions that may involve illegal or fraudulent activities.
According to Vyacheslav Pak, the First Deputy Director of NAPP, the agency is working on new guidelines for registering crypto miners and operating mining pools.
He also said that the agency will assist entrepreneurs who want to issue tokens to raise funds for their projects.
He added that the agency is committed to various legislative initiatives, such as updating the current licensing system and reevaluating the mining conditions, with a focus on expanding the list of permissible alternative energy sources.
Pak emphasized that NAPP is an inter-agency government body that works in coordination with other authorities, such as the Central Bank, the financial intelligence unit, and the Ministry of Internal Affairs.
He said that NAPP’s role is to ensure the security and stability of the crypto market and foster innovation and growth.
NAPP’s Regulatory Sandbox and Global Partnerships
NAPP also operates a regulatory sandbox, a testing environment for new technologies and business models in the crypto space.
The sandbox allows participants to experiment with their products and services under relaxed regulatory conditions while receiving feedback and guidance from NAPP.
Pak revealed that currently, there are three participants in the sandbox: United Integrator Uzinfocom LLC, which is a state-owned IT company; Kapitalbank JSC, which is one of the largest banks in Uzbekistan; and Ravnak Bank JSC, which is a private bank.
He said that these participants are exploring various use cases of blockchain and crypto technologies, such as digital identity, cross-border payments, and tokenization.
Pak also mentioned that NAPP has been in talks with some of the leading global crypto platforms, such as Binance, Huobi, and Bybit.
He said that these platforms are interested in entering the Uzbek market and setting up operations in the country.
He also stated that NAPP welcomes such partnerships and hopes to attract more foreign investors and experts to the Uzbek crypto ecosystem.
Crypto Potential in Uzbekistan
Uzbekistan is one of the few countries in the world that has a favorable attitude towards crypto and blockchain.
The country legalized crypto trading in 2018 and exempted crypto income from taxation until 2023.
The country also offers low electricity rates for crypto miners, which makes it an attractive destination for mining operations.
However, Uzbekistan also faces some challenges in developing its crypto industry. The country has a low level of internet penetration and digital literacy, which limits the adoption and awareness of crypto among its citizens.
The country also has strict capital controls and currency restrictions, which hamper the flow of funds between local and foreign crypto platforms.
Nevertheless, Uzbekistan has a huge potential to become a regional hub for crypto innovation and growth.
With its supportive regulatory environment, abundant natural resources, and strategic location, Uzbekistan can leverage its advantages to create a vibrant and diverse crypto ecosystem.
