Uzbekistan Urges Vigilance As It Cracks Down On Unlicensed Crypto Exchanges

Table of Contents

• Growing Number Of Unregistered Platforms 
• Changes To Legal Framework 
• A Hostile Environment 

In a circular released recently, the government of Uzbekistan has identified over half a dozen cryptocurrency exchanges that have been working without any authorization in the country, allowing citizens to buy, sell, or exchange crypto assets. 

The government has taken a strong stand against these illegal exchanges and is working towards stopping them from functioning in the country. 

Growing Number Of Unregistered Platforms 

Regulatory authorities in Uzbekistan have alleged that several exchanges were providing services in the country without being based in or even being registered in the country. The list of allegedly illegally operating exchanges includes platforms such as webmoneytashkent.com, wmztashkent.com, and bitcointashkent.com.

The circular also pointed out the use of social media platforms such as Telegram to run anonymous groups that could potentially play a role in fraud. The release stated, 

“The Agency urges citizens to be as vigilant as possible, and not use services of such platforms, so as not to become victims of fraud.”

The authorities also warned the authorized exchanges that their activities in the digital economy are subject to licensing. 

Changes To Legal Framework 

Uzbekistan has made several changes to its legal framework starting in 2018. The president of the country had also signed a decree in the same year, which would facilitate cryptocurrency mining, exchanges, transactions, taxation, and licensing of the digital assets and the providers of these assets. This made it mandatory for cryptocurrency exchanges to obtain a license from the regulatory authorities before starting their operations in the country. 

The changes also specified that the electronic systems of the exchange server must be located within the jurisdiction of the authorities of Uzbekistan in order to offer their services to the residents of the country. However, in 2019, citizens of the country were barred from buying digital currencies and could only sell them under specific rules. 

A Hostile Environment 

Behzod Khamraev, the Deputy Chairman of Uzbekistan’s central bank, commented last month that the currency in circulation within the country is worth 28 trillion, which he added was backed by the central bank’s assets. He further added, 

“You can even see an inscription on the obligations of the regulator on banknotes, and the cryptocurrency is not backed by anything.”

He also stated that he would never consider cryptocurrencies as equal to fiat currencies like the Dollar, Euro, or Yen and that he only considered digital assets as speculative. 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.