New Tax Merit Awaits Crypto Bourses in Uzbekistan
Uzbekistan is preparing new tax benefits to companies that are planning to establish cryptocurrency exchanges within the country, signaling its willingness to welcome digital currencies with open arms.
Foreign exchanges will receive a number of benefits once their bourses are up and running, based on an order promulgated by President Shavkat Mirziyoev earlier this month.
Some of the provisions are cryptocurrency-related income will be exempt from taxes, licensed exchanges transacting with cryptocurrencies and foreign fiat currencies are not subject to existing foreign currency rules, and crypto bourses are not subject to the country’s securities and exchanges regulations.
But here’s the catch: these entities will only be able to secure a license to run a crypto exchange after opening a subsidiary in Uzbekistan.
Moreover, before opening a bourse, one must have an authorized capital of not lower than 30,000 times the average minimum salary, which amounts to about $700,000; employees must be residing in the country; exchanges must observe anti-money laundering guidelines for users and they must maintain the clients’ transaction and personal details for at least five years.
The circular also covers miners that utilize more than 100 kilowatt-hours (kWh) of power with land without the need for an auction on certain designated territories.
The Uzbekistan government issued this order after unveiling its goal of instituting new regulations for digital currencies in the country. In February, the government also revealed its plans to create a state-funded innovation center for exploring various opportunities of the blockchain technology in Tashkent, a local news report said.
“The creation of a legal framework for the legalization of electronic money and blocking technology is also being conducted in neighboring Kazakhstan, where the issue of the introduction of the national crypto currency is also being considered,” a report by Fergana.ru said, translated from Russian.
“In addition to the registration, the critique of anticipation of the anonymous operations is a consequence of misunderstandings and mismanagement, and in some countries the disadvantages of the economy in the near future,” the statement reads.
“The issue of legalization of crypto-currency is included in the ‘roadmap’ for the cardinal improvement of the information and communication technologies system for 2018-1919. Here, a separate item is the creation of a competence center for distributed registry technologies (block). This structure will begin work on June 1, 2018 on the basis of the innovation center ‘Mirzo Ulugbek Innovation Center,’” it added.
In September last year, Uzbekistan’s central bank said that at this phase of economic development, it is suitable to allow companies to operate cryptocurrency businesses in the country. But it warned that electronic money can be used to fund terrorism and other criminal activities because of limited control by the regulator.
Uzbekistan has become one of the three countries that has managed to extract virtual currency. For instance, the mining of one bitcoin will cost only $1,790 (at the rate of $11.000 for one bitcoin as of writing). On the other hand, less costs will be required only to residents of Trinidad and Tobago and Venezuela.