Byline: Hannah Parker
Photo by: Vadim Artyukhin on Unsplash
Two of Uzbekistan’s private banks acquired approval to issue crypto cards integrating banking with direct crypto access. Uzbekistan has approved Kapital Bank and Ravnaq Bank to issue crypto cards as part of the digital sandbox for crypto regulation.
The National Agency for Perspective Project (NAPP) overseeing the crypto regulation announced in August 2023 that a bank account with access to a crypto exchange and an automatic exchange mechanism will be integrated with plastic crypto cards named UzNEX. The crypto cards will be powered by the globally recognised payment provider MasterCard.
Details on the Matter
The end of December 2023 marks the deadline for both Banks’ crypto card’s final customer rollouts. The UzNEX crypto card innovates by integrating a bank account with direct crypto exchange access and automated exchange. For instance, this fusion offers users a holistic financial experience, bridging traditional banking and the digital currency nation.
Kapital and Ravnaq are significant players, two of the three registered participants in the national digital sandbox. The release stated, “The participants of the special regime will test the solution for integrating the automated banking system, the information system of the crypto-exchange, the processing centre of the bank and the MasterCard international payment system”. On August 14th 2023, the NAPP announced Ravnaq Bank’s inclusion and confirmed that Kapital Bank would issue its crypto card in early May 2023.
Uzbekistan’s Crypto Timeline
This unfolds amidst broader Uzbekistan crypto regulations. Since 2023, the government of Uzbekistan has prohibited providing crypto services to unlicensed crypto firms. Experts from Bitai method mentioned that in November 2022, the first licences were granted to local crypto firms. The Uzbekistan government mentioned that only licensed crypto firms will be allowed to provide crypto trading services to Uzbek citizens from January 2023.
The licence officially authorised crypto-related services by two crypto stores, including Crypto Market LLC and Crypto Trade Net LLC. A spokesperson for the NAPP mentioned that the regulated crypto shops in the country are authorised to operate both an offline physical exchange and an online crypto trading platform. The two companies were licensed based on the Presidential decree issued in April 2022, which established rules for crypto assets circulation in Uzbekistan. Uzbek President Shavkat Mirziyoyev instructed reorganisation and adopted several initiatives in the crypto industry since assuming office in 2016.
In 2018, Mirziyoyev established a state blockchain development fund called the Digital Trust to integrate blockchain into various government projects, including education, healthcare and cultural areas. According to the April 2022 statement, crypto shops were designed to provide easier access for Uzbek citizens to buy or sell cryptocurrencies. The report emphasised that citizens should be vigilant and desist from using electronic platforms that do not have a licence to operate in the Republic of Uzbekistan.
The news came shortly after the government of Uzbekistan blocked several major global crypto exchanges, such as Binance, FTX and Huobi, from offering trading services due to the absence of a proper licence. Due to accusations of unlicensed activities on August 10, 2022, the NAPP informed crypto exchanges functioning without licences that they were violating the existing law and that their access was restricted. The NAPP stated, “They have no legal responsibility for transactions with crypto-assets, and cannot guarantee the legitimacy of transactions, as well as the proper storage and protection of confidentiality of personal data of citizens of the Republic of Uzbekistan”.
NAPP Background
The NAPP gained the status of principal crypto regulation in Uzbekistan at the end of April 2022. The President reorganised the presidential agency known as the National Agency for Project Management (NAPM) and restructured it into NAPP. The agency is responsible for crypto regulation-related projects and adopting a particular regime. The NAPP is required to develop and adopt a unified state policy on crypto, ensure investor protection, and enforce measures to tackle illegal activities like terrorism financing.
The agency will also promote and initiate projects applying blockchain and other socio-economic and emerging technologies in public administration sectors. The NAPP can set up legal conditions for entities using blockchain and crypto tech and virtual asset providers​​, including mining firms, crypto trading, industry stores, etc. The agency is also responsible for licencing and supervising virtual asset service providers, which must pay several state fees. Participants pay mandatory deductions to all types of taxes, state trust funds, and customs payments for technological documentation and software not produced in the Republic of Uzbekistan.
The move to allow Kapital Bank and Ravnaq Bank to issue crypto cards shows how determined Uzbekistan is to adopt crypto assets in Uzbekistan. The National Agency for Perspective Projects provides comprehensive cryptocurrency regulations nurturing Uzbekistan’s crypto sector growth.
