Uzbekistan Prohibits Cryptocurrency Investments by its Citizens

Uzbekistan government has supposedly prohibited its citizens from buying cryptos. As per media news outlet Novosti Uzbekistana, the National Project Management Agency has banned its residents from buying crypto, even via reputed cryptocurrency exchanges.

The announcement has surprised crypto enthusiasts as the country had been taking a considerably friendly stance against cryptocurrencies.

In September 2018, Uzbekistan inked a memorandum of understanding (MoU) to overview and put in place licensing rules for cryptocurrency exchanges, initial coin offerings and mining operations.

In the same month, Uzbek President Shavkat Mirziyoyev directed the setting up of a state blockchain development fund, referred to as the “Digital Trust.”

In July 2018, he inked a contract on the development and incorporation of blockchain technology into the nation’s public administration system.

The recent rules prohibit citizens from buying or selling cryptos. However, it offers minimum trading permissions to existing cryptocurrency holders.

Uzbekistan citizens possessing cryptos can dilute their holdings on two regulated exchanges after going through KYC (Know Your Customer) process, supposedly to prevent the probability of money laundering.

The regulation also states that crypto assets whose origin cannot be evidenced are not allowed by law to be either owned or transferred.

A news report by Finance Magnates points out that the law could not be effective, since Uzbeks could circumvent the rule by using a virtual private network, or VPN, and get connected to crypto trading platforms outside Uzbekistan.

Across the globe, several countries have taken a tough stance on crypto sector. In fact some officials in India had sought a blanket ban on all kinds of digital assets.

Russian officials are supposedly working to implement a ban on cryptocurrencies being used for the purchase of goods and services.

While some crypto think tanks anticipate a crackdown on cryptocurrency sector, others argue that the complications in implementing a ban implies that it will be reduced to a chain of ‘demonstration cases’ that aim to discourage the public from violating the law.