Uzbekistan is discussing the creation of a Regulatory sandbox for the development of digital technologies “Uzbekistan Blockchain Valley” with the participation of the National Agency for project management (NAPU).
This initiative is aimed at attracting foreign investment, creating favorable conditions for startups working in the cryptocurrency industry, and regulating the turnover of digital assets. The priority tasks include digitalization of the activities of public institutions through the introduction of blockchain and smart contracts.
The foundations for legal regulation of cryptocurrencies in Uzbekistan were laid back in 2018, when the country’s President Shavkat Mirziyoyev signed resolutions “on measures to develop the digital economy in the Republic of Uzbekistan” and “on measures to organize the activities of cryptocurrency exchanges in the Republic of Uzbekistan”.
Given the lack of common standards for regulating the turnover of cryptocurrencies and the rapid development of digital technologies, existing approaches to regulation may be ineffective. Therefore, NAPU proposed to create a Regulatory sandbox for the development of digital technologies in the country “Uzbekistan Blockchain Valley”, which is a special legal regime for startups and innovative companies.
The main activities of residents of the Regulatory sandbox of Uzbekistan will include:
blockchain development and implementation;
making OTC transactions with digital assets;
private and industrial mining;
cryptocurrency exchange services, as well as cryptocurrency wallet services;
token-share offer (STO);
other activities related to blockchain and digital asset turnover.
To become a resident of the Regulatory sandbox, firms must not only engage in one of these activities, but also have their own unique technology suitable for testing in the “sandbox”, or apply a unique approach to the use of well-known technologies. In addition, such companies must work out a further development plan with targets, assess risks and draw up an action plan to minimize them, as well as have written confirmation of potential clients ‘ readiness to participate in the project.
The project implementation period is 12 months, and this period can be extended for no more than 24 months. If the project proves to be effective after this period, the Uzbek authorities will decide to introduce the relevant provisions in the legal acts of the Republic of Uzbekistan, and the project will continue its development beyond the Regulatory sandbox. If, after analyzing the project, it is found to be ineffective – its further implementation will be terminated.
According to NAPU, the Regulatory sandbox will serve as an” intermediate link ” for creating an effective mechanism for regulating the turnover of cryptocurrencies and implementing blockchain in various areas of activity. This will comply with the standards of the International financial action task force (FATF) for virtual assets. NAPU will take a cautious approach in creating a regulatory environment for cryptocurrencies to protect the rights and interests of citizens, as well as prevent the use of digital assets for money laundering and terrorist financing.
Initiatives to create regulatory sandboxes are being put forward in different countries, which indicates that they are ready to actively implement blockchain for the development of their economy. Last month the Ministry of economic development has proposed to create a Pilot country legal regimes providing for cryptocurrency startups concessions in the area of currency control and regulation, and in relation to the size of the share capital. State government Hawaii also intends to create an “Innovation laboratory for digital currencies”, in which cryptocurrency issuers will be able to work in Hawaii without a state license to provide financial services.