Connect with us

Regulation

Uzbekistan Bans Crypto Purchases

mm

Updated

 on

In a surprising turn of events, government officials from Uzbekistan made the decision to ban the purchase of digital currencies. This unexpected decision comes on the heels of numerous pro-crypto legislation. Now, Uzbekistani crypto investors are left in a quandary.

Numerous local news outlets took to the air to announce the abrupt decision by lawmakers. The new legislation bars all citizens from buying digital currencies, even from licensed crypto exchanges. Uzbekistan famously led the way in crypto adoption after legalizing exchanges last year. Unfortunately, it appears that the pro-crypto tide has changed amongst lawmakers from this central Asian country.

 

Seller Stipulations – Uzbekistan

The new legislation allows anyone holding any digital currency to sell their holdings. However, it does place a number of new stipulations on the sellers. For example, traders now have to prove that they gained their crypto through legal means. This stipulation places a heavy burden on traders that have been in operation for years. They will now need to reproduce records of their purchases and trades from potentially a decade ago.

Uzbekistan
Uzbekistan

 

Importantly, the new law states that any asset whose source cannot be proved is now considered illegal. In this way, Uzbekistani traders find themselves in a sticky situation. For one, they will now have to find and prove their crypto origins which for many investors, could prove to be nearly impossible.

 

Even more frustrating is the fact that investors can only sell their holding to foreign nationals. Since purchasing crypto is now illegal in the country, crypto bag holders will have to continue to HODL their coins, or they will need to seek out foreigners to buy their tokens. Unfortunately, this task will not be an easy one as the country only has two main exchange platforms authorized to conduct these transactions.

 

Enforcement Concerns – Uzbekistan

As soon as the new legislation came to light, a number of questions arose regarding the ability to enforce such a wide-sweeping law. Analysts pointed out just how hard it would be to stop citizens from purchasing cryptocurrencies. Today, these coins are easily bought and sold anywhere using virtual private networks (VPNs). The decentralized design of these tokens can make it a very daunting task to try and track down who owns what tokens.

 

Crypto-Friendly

Sadly, Uzbekistan had a great reputation as a crypto-friendly country. The country was a pioneer in the space as one of the first places to institute exchange licenses and crypto trading. On top of these benefits, the country also provided tax benefits to crypto holders. The country didn’t tax any revenue made from cryptos. At the time it appeared as if Uzbekistan was to become a crypto hub in central Asia.

 

Uzbekistan Turns its Back on the Crypto Community

It now appears that Uzbekistani officials have no desire to share in the benefits of blockchain technology. The country’s latest decision showcases a mixture of fear, greed, and negligence towards this innovative financial sector. There is no doubt that this legislation will end up costing the country billions in potential blockchain revenue. Hopefully, lawmakers regain some sense and rescind the new overreaching regulations before the damage is done.

David Hamilton is a full-time journalist and a long-time bitcoinist. He specializes in writing articles on the blockchain. His articles have been published in multiple bitcoin publications including Bitcoinlightning.com

Newsletter Subscription

Advertiser Disclosure: Securities.io is committed to rigorous editorial standards to provide our readers with accurate reviews and ratings. We may receive compensation when you click on links to products we reviewed.

ESMA: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

Investment advice disclaimer: The information contained on this website is provided for educational purposes, and does not constitute investment advice.

Trading Risk Disclaimer: There is a very high degree of risk involved in trading securities. Trading in any type of financial product including forex, CFDs, stocks, and cryptocurrencies.

This risk is higher with Cryptocurrencies due to markets being decentralized and non-regulated. You should be aware that you may lose a significant portion of your portfolio.

Securities.io is not a registered broker, analyst, or investment advisor.