The National Agency for Prospective Projects of Uzbekistan (NAPP) has framed a regulation on registration for crypto miners. The executive order exempts all mined assets from taxation and prohibits mining anonymous currencies.
NAPP Sets Conditions for Crypto Miners
The National Agency of Prospective Projects (NAPP) of Uzbekistan has set forth its requirements for cryptocurrency miners in the country. It would only allow firms that utilize solar energy to mine Bitcoin (BTC) or other cryptocurrencies.
The normative act published on the government website on June 24 mandates the confirmation of “Guidelines on the registration of the mining of crypto assets.” It specifies July 9 as the date of finalization. The second article of the document states:
“Mining is being carried out only by the legal entity with the use of electric energy, provided by a solar photovoltaic power plant.”
As an additional complexity, the miners should own the solar photovoltaic power plant from which they would derive their electricity. The executive order also requires every crypto miner to acquire a certificate and register in the national registry of crypto mining firms, which requires a brief list of documents and thus should take no more than 20 days from submission to final decision by licensing authority. The certificates will be valid for one year after they are registered.
The government of Uzbekistan would exempt any cryptocurrency generated by mining operations from taxation; However, mining firms would be subject to special tariffs on energy consumption. In addition, trade operations using mined assets would be limited to exchange platforms that have been registered in Uzbekistan. The regulation prohibits the mining of anonymous cryptocurrencies.
Uzbekistan Continues Steps to Regulate the Crypto Market
In April 2022, the newly restructured NAPP became Uzbekistan’s exclusive crypto regulator, with the objective of establishing a distinct crypto regulatory regime in the country. This is the latest in a series of steps taken by President Shavkat Mirziyoyev to lay the groundwork for crypto regulation in the country. In September 2018, Mirziyoyev approved a bill restricting the development of cryptocurrency exchanges by domestic companies. The regulation only granted legal standing to crypto exchanges created by foreign legal firms.
The Uzbek government recommended a raft of legislation in 2020 to stimulate cryptocurrency activity in the country. It planned to build a national mining pool as well as a licensed cryptocurrency market where miners could sell their coins. Furthermore, the government advocated enforcing crypto tax exemptions and establishing a blockchain valley. In September 2021, the deputy chairman of Uzbekistan Central Bank emphasized the importance of the Central bank digital currency (CBDC), which, unlike Bitcoins, is backed by the bank’s assets.
Uzbekistan is a former Soviet republic that attained independence following the disintegration of the Soviet Union. The country shares a border with Kazakhstan, which was once a pioneer in cryptocurrency mining. Because of the impact that mining operations have on the country’s electricity infrastructure, which is dominated by aging coal power plants, the neighboring country has cracked down on the industry.