Uzbekistan is making bold moves to position itself as a regional leader in the cryptocurrency and blockchain space. With sweeping reforms that include tax exemptions for crypto-related income and the introduction of a formal licensing framework for exchanges and miners, the Central Asian nation is sending a clear signal: it’s open for digital asset business.
These strategic initiatives are part of a broader national vision to modernize the economy, attract foreign investment, and establish a regulated yet innovation-friendly environment for blockchain technology. As neighboring countries remain cautious or restrictive, Uzbekistan’s proactive stance could give it a first-mover advantage in shaping the future of finance across Central Asia.
A Progressive Legal Framework for Crypto
Uzbekistan’s journey toward crypto legitimacy began in 2018 when President Shavkat Mirziyoyev signed a landmark decree legalizing cryptocurrency transactions and introducing licensing for crypto exchanges. This early move placed the country ahead of many regional peers in embracing digital assets.
Now, Uzbekistan is taking its ambitions further. A recently published draft presidential decree—part of Presidential Decree ID-12538 “On Measures to Further Develop the Circulation of Crypto Assets in the Republic of Uzbekistan”—proposes full tax exemption on income derived from crypto operations. The key provision states:
“Business activities related to crypto asset circulation, including those conducted by non-residents, shall not be subject to taxation. Income generated from such activities will not be included in the tax base for taxes or other mandatory payments.”
This tax-free status applies to both individuals and legal entities, creating a highly attractive environment for international investors, traders, and blockchain startups. By excluding crypto transactions from foreign currency regulations and removing tax burdens, Uzbekistan aims to become a neutral, accessible hub for global crypto activity.
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Building Infrastructure: From “Blockchain Valley” to National Mining Pools
Beyond regulation, Uzbekistan is investing heavily in physical and institutional infrastructure to support a sustainable crypto ecosystem.
The National Agency for Project Management (NAPM) has launched the “Uzbekistan 2020 Program,” which includes plans to create a centralized national mining pool. This initiative aims to consolidate both domestic and international mining operations under a unified, energy-efficient model. By optimizing power usage and ensuring compliance, the government hopes to turn mining into a legitimate, scalable industry.
Starting February 1, all industrial-scale crypto mining activities require official licensing—a move designed to formalize the sector and prevent unregulated energy consumption.
Even more ambitious is the proposed "Blockchain Valley", a regulatory sandbox located in Tashkent. Inspired by similar innovation zones in tech-forward economies, this zone will allow companies to test blockchain-based financial products and services under relaxed regulatory oversight—without violating existing laws.
The project is being developed in collaboration with key institutions:
- Central Bank of Uzbekistan
- Ministry of Information Technologies and Communications
- Ministry of Energy
- National Agency for Project Management
This cross-sector coordination underscores the government’s serious commitment to building a cohesive digital economy.
Launch of Uznex: The Region’s First Licensed Crypto Exchange
A major milestone was reached on January 20 with the official launch of Uznex, Uzbekistan’s first state-licensed digital asset exchange. Based in Tashkent and operated by South Korea’s Kobea Group, Uznex offers trading pairs for Bitcoin (BTC) and Tether (USDT), including BCH/BTC and BCH/USDT.
While currently limited in functionality—no fiat deposits or withdrawals are available yet—Uznex supports transactions in Uzbek som (UZS), USD, and credit cards. Full fiat integration is expected soon as systems undergo testing.
Access rules differ by user type:
- Local citizens: Can only sell mined cryptocurrencies
- Foreign individuals and entities: May use full exchange services under Uzbek law
This distinction reflects a cautious approach to capital controls while still opening doors to global participation. For now, Uznex stands as the only legally operating crypto exchange in Uzbekistan—and possibly the entire Central Asian region.
Looking ahead, Kobea Group plans to expand Uznex’s offerings to include:
- Digital financial asset investments
- Cross-border money transfers
- Credit services for global users
Additionally, the company intends to contribute to long-term education by launching blockchain courses at top Uzbek universities—an effort that could cultivate local talent and drive homegrown innovation.
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Frequently Asked Questions (FAQ)
Q: Is cryptocurrency legal in Uzbekistan?
A: Yes. Since 2018, crypto transactions have been legal under presidential decree. The government has since introduced licensing for exchanges and miners, and now proposes tax-free status for crypto income.
Q: Can foreigners use crypto exchanges in Uzbekistan?
A: Yes. Foreign individuals and companies can fully use licensed platforms like Uznex under the country’s legal framework, though local residents face some restrictions on buying crypto.
Q: What is Blockchain Valley?
A: It’s a proposed regulatory sandbox in Tashkent where startups can test blockchain-based financial services in a controlled environment with temporary regulatory relief.
Q: Are crypto earnings taxed in Uzbekistan?
A: Under the latest draft legislation, no. Income from crypto operations—including trading, staking, and mining—is set to be excluded from taxation for both residents and non-residents.
Q: Is mining legal in Uzbekistan?
A: Yes, but industrial-scale mining requires a government license starting February 1. The state also plans to establish a national mining pool to improve efficiency and oversight.
Q: What makes Uzbekistan different from other Central Asian countries on crypto?
A: Uzbekistan is the most advanced in the region with formal licensing, tax incentives, dedicated infrastructure projects, and active public-private partnerships—setting it apart from more restrictive neighbors.
The Road Ahead: Can Uzbekistan Lead Central Asia?
With tax exemptions, clear regulations, institutional backing, and strategic infrastructure development, Uzbekistan is laying the groundwork to become a dominant player in Central Asia’s evolving digital economy.
While challenges remain—such as finalizing fiat gateways and ensuring widespread adoption—the country’s consistent policy direction suggests long-term commitment rather than short-term experimentation.
As more nations grapple with how to regulate crypto without stifling innovation, Uzbekistan’s balanced approach offers a compelling model. By combining openness with oversight, it may well emerge as the region’s go-to destination for blockchain entrepreneurs, miners, and investors.
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