From Kazakhstan to Uzbekistan: how cryptocurrencies are regulated in Central Asia
Kahazstan demonstrates a clear interest in the cryptocurrency. According to the study, whose data were published by the search engine Yandex in March of this year, the citizens of this country in the current year, frequently and on a larger scale looking for online information about cryptocurrency than in 2017.
However, the legislation of cryptocurrency circulation in the country is still missing. However, there are indications that the situation may change in the near future: in may, the President of Kazakhstan, Nazarbayev called for “world cooperation in the field of regulation of cryptocurrencies”.
Nazarbayev stressed that “most countries are actively studying the possibility to adapt cryptocurrency to an existing configuration of financial systems”, adding:
“At the same time, we see that the policy of different States in this respect varies considerably from country to country. The fragmentation would lead to inefficiency. You need to begin to develop uniform rules”.
Shortly before the President made this statement, the national Bank of Kazakhstan has announced that it intends to ban cryptocurrency trading and mining. March 30 the head of the Bank Daniyar Akishev said in interview with RIA— Novosti:
“In Kazakhstan, the national Bank is conservative about this issue, welcoming only quite tight restrictions. That is, we want to ban the purchase and sale of cryptocurrencies in the national currency, we want to ban the activities of the exchanges on this segment and all kinds of mining”.
Akishev argued a potential total ban cryptocurrencies by the necessity of investor protection and compliance with the law on verification of identity of clients and anti-money laundering. He added that the position of NSC is close to the “majority of authorities”, and his Agency has already prepared amendments to the law.
Kazakhstan is actively trying to become a major regional hub of the blockchain in June in the capital, Astana happened “the most important event in the field of Finance in Central Asia” with the support of the authorities and the Kazakhstan Association of blockchain and cryptocurrency conference was held on the blockchain.
Kazakhstan Association of the blockchain and cryptocurrency was registered in November 2017. The founders were at least six organizations. Some of them headed by people who previously worked in local regulatory authorities. The Chairman of the Association said that it aims to “joint regulator with the development of the rules of the cryptocurrency market and sector blockchain”.
Some representatives of the authorities have already started to study the technology underlying the cryptocurrency. So, in April the Ministry of Finance has announced the launch of a database on a blockchain and a local cluster of innovative projects in collaboration with the Corporation IBM has started studying the possibility of introducing IT giant Hyperledger Fabric in the Kazakh economy.
In July 2014 Kyrgyzstan has banned cryptocurrencies, when the national Bank of the Republic of Kyrgyzstan has declared illegal the use of bitcoin and other virtual currencies as means of payment. The only legal tender Bank said the local currency som (UZS).
In addition, the Central Bank warned the citizens about the lack of legislation in cryptocurrency circulation and a high level of volatility. Around the same time, in the summer of 2014, financial analysts, the Italian Emmanuel Costa was established in Bishkek, the bitcoin ATM. According to Costa, the ATM will make it easier for migrants working outside of Kyrgyzstan, the process of sending funds home. According to the world Bank, remittances in 2013 amounted to 31% of Kyrgyz GDP.
Despite the tough stance of the Central Bank in regard to cryptocurrencies, the latter is still present in the country. The head of the Agency for the development of an international financial centre Valery tutykhin said in an interview with the news Agency 24.kg that investing in crypto currencies is possible in Kyrgyzstan:
“The local stock infrastructure can be used for investment in any scriptactive. Someone wants to buy such assets? Let him do it through the local commodity exchange and pays local taxes. Someone wants to raise funds in your startup through the ICO (the collection of funds through the placement captopril)? This can be done through the Kyrgyz stock exchange. Its listing rules are not as complex”.
Despite the absence of relevant legislation, Kyrgyzstan is quite friendly to the blockchain.
According to a March report entitled “the Legal status of blockchain technology in Kyrgyzstan” issued by the stock exchange of the country and development Agency international financial centre, and prepared by the Geneva law firm John Tiner & Partners, the laws of Kyrgyzstan do not prohibit the development of projects blockchain (including mining and cryptocurrency trading) and do not interfere with their activities.
In particular, the stock exchange of the country works for the project of the blockchain, which will allow for the trading of securities and to make payments in real time. Moreover, in April the State patent office of the Kyrgyz Republic (Kyrgyzpatent) has announced its intention to reprovisioning patent records and create a database based on the blockchain with the Russian national centre for the coordination of transactions of intellectual property.
Cryptocurrency is not legalized in this country and not prohibited.However, in January the national Bank of Tajikistan for the first time has officially commented on this, calling bitcoin “an instrument of financing of terrorism”. In General, according to the Tajik service of “Radio Liberty”, the Bank of presterilisation in respect of “risks associated with the use of cryptocurrency”. Blockchain
Although the Tajik authorities seem to ignore this technology in the country there are projects blockchain. In particular, in June 2017 the Hong Kong startup Bitspark blockchain together with the United Nations programme for development has begun to explore the potential of transferring money using blockchain technology as a means of improving the financial situation in Tajikistan.
According to the researchers Bitspark, Tajikistan remains a country where 85 to 90 percent of the population lacks access to banking services. They are forced to use alternative services by cross-border and domestic payments.
Recently a Russian scientist grimly joked, saying:
“Kazakhstan is an example of “soft” authoritarian regime, Tajikistan – hard authoritarian regime, Uzbekistan is a totalitarian regime, well, the Turkmenistan – just a classic Oriental despotism, without any half-tones”.
Local orders can be illustrated with numerous examples, but suffice it to say that the will of the sun ruler of men in this country are forbidden to wear beards (except for a few mullahs), mustache, sideburns and long hair, and women are required to wear Turkmen national clothes and braid traditional cornrows. Naturally, in almost complete isolation from the outside world any specific information on the legal status of cryptocurrencies in Turkmenistan. According to rumors, the virtual currency in Turkmenistan can be bought for US dollars, but the government is doing everything possible to deprive citizens and local companies access to foreign currency.
Maybe with the new President of Uzbekistan is making some progress in the field of cryptocurrency, namely, now legalized in the country of cryptocurrency trading and mining, and cryptocurrency traders exempt from taxes.
On 3 July the President of Uzbekistan Shavkat Mirziyoev, signed a resolution “On measures for development of digital economy in the Republic of Uzbekistan”. According to the decree, “October 1, 2018 in the area of trafficking scriptaction, including the establishment of kryptomere trade crypto-currency subject to licensing”. The competent authority for licensing of cryptocurrency trading designated National Agency project management office (NAPA) under the President of Uzbekistan.
The decree specifies that “cryptocurrency transactions conducted by persons licensed, is not subject to the provisions of the law on currency regulation”: operations with a turnover of cryptocurrency will not be taxed, and the proceeds included in the taxable base.
September 2 decree entered into force. The government confirmed that it would not consider cryptocurrencies as securities, so the laws pertaining to stock exchanges, will not apply to cryptocurrency exchanges. Instead, the cryptocurrency business will work in accordance with the new set of rules, the so-called special regulations.
Only foreign legal entities, which already have subsidiaries or other enterprises in Uzbekistan, will be able to open a cryptocurrency exchange. These structures will be exempt from paying taxes on their cryptocurrency projects.
On the other hand, any profit made from the cryptocurrency, will not be taxed, given that Uzbekistan gives scriptactive the definition of”records of the dataset on the blockchain” – which they really are is “of value and having the owner”, according to the text.
The presidential decree also legalized mining in Uzbekistan and ordered the state energy company to provide the miners of land for their operations. The mining company will use more than 100 kilowatt— hours of electricity in the areas allocated for them by the National Agency project management office, created by presidential decree.
The July decree of the President of Mirziyoyev, NAPA and the Ministry for development of information technologies and communications commissioned in 2018 2020 to implement a programme on development of blockchain in Uzbekistan. In the framework of this program provides implementation on January 1, 2021 blockchain in the work of state bodies, public procurement, government services, verification of information about the person; the conduct of public registers, classifiers and other databases; the system of corporate management of large commercial organizations with the state share in the Charter; in clearing operation, while making payments, trade Finance, and credit system.
In General, NAPA and the Ministry for development of information technologies was commissioned before January 1, to prepare a draft law “On digital economy and blockchain technologies.” These agencies should define “the basic concepts in the field of blockchain technology and its functioning principles; the powers of state bodies and actors in the field of blockchain; to provide for penalties in the case of using this technology for illegal purposes”. Also, they prescribed a two-month deadline to make “regulations on the procedure of licensing of activities for scriptactive” and “proposals for changes and additions to legislation arising from this decree”.