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.
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.
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.