Uzbekistan Restricts Bitcoin Mining to Legal Entities and Solar Power Usage

Key Insights

• Uzbekistan’s cryptocurrency mining regulations now permit only legal entities, effectively barring individual miners.
• Solar power is mandated as the primary energy source for crypto mining, aligning with sustainability goals.
• The nation’s crypto industry is evolving rapidly, with major banks integrating crypto services, hinting at wider adoption.

Uzbekistan’s cryptocurrency landscape is undergoing a significant transformation as the nation’s crypto market regulator, the National Agency for Perspective Projects (NAPP), has introduced a comprehensive framework for licensing cryptocurrency mining operations. In a bold move, the NAPP has imposed strict regulations, allowing cryptocurrency mining only by legal entities and mandating the use of solar power as the primary energy source. These developments signal a major shift in the country’s approach to cryptocurrency mining.

New Regulations for Bitcoin Mining in Uzbekistan

In a recent decree issued by the NAPP, cryptocurrency mining in Uzbekistan has been restricted exclusively to legal entities. This regulation effectively bans individual miners from participating in cryptocurrency mining activities within the country. Moreover, legal entities engaged in mining are now required to rely primarily on solar power for their operations, reflecting Uzbekistan’s commitment to sustainable energy sources.

While the decree does mention the possibility of using the unified power system of Uzbekistan under certain unspecified conditions, the focus on solar power aligns with global efforts to reduce the environmental impact of cryptocurrency mining, which has often been criticized for its energy-intensive nature.

Dedicated Mining Facilities and Registered Addresses

In addition to the legal entity requirement, cryptocurrency mining firms must adhere to several other stringent conditions. They are obligated to establish dedicated facilities for housing mining equipment, ensuring the separation of mining operations from other business activities. Furthermore, mining can only take place at the registered address of the legal entity, promoting transparency and accountability.

The NAPP’s regulations also mandate that cryptocurrency mining firms must make timely and complete payments of mining fees as determined by regulatory authorities. This financial requirement aims to ensure that mining activities contribute to the nation’s economic growth while complying with tax and revenue guidelines.

Ban on Anonymous Cryptocurrencies

One notable aspect of the NAPP’s decree is the prohibition of mining anonymous cryptocurrencies, specifically citing privacy-focused coins like Monero. These cryptocurrencies allow users to obscure transaction details, making them difficult to trace. By banning their mining, Uzbekistan is aligning itself with international efforts to combat illegal activities associated with anonymous digital currencies.

The Road Ahead for Uzbekistan’s Crypto Industry

It remains unclear whether the NAPP’s recent regulatory framework is the final decree governing cryptocurrency mining in Uzbekistan. The country has previously issued multiple similar documents in recent years, consistently emphasizing the prohibition of individual miners and the need for strict oversight.

It’s worth noting that these developments come on the heels of other significant crypto-related announcements in Uzbekistan. Just a month ago, the NAPP approved two major banks, Kapital Bank and Ravnaq Bank, to participate in the nation’s digital sandbox for crypto regulation. These banks are set to issue crypto cards in collaboration with Mastercard, further integrating cryptocurrency services into the Uzbek financial system.

Both banks are planning to roll out crypto cards under the name “UzNEX” by the end of December 2023. These cards will offer users access to cryptocurrency exchanges and automated exchange mechanisms, marking a significant step toward mainstream adoption of digital assets in Uzbekistan.

Conclusion

Uzbekistan’s move to restrict cryptocurrency mining to legal entities and mandate the use of solar power represents a significant shift in its approach to the crypto industry. These regulations aim to strike a balance between fostering innovation and ensuring responsible, sustainable cryptocurrency practices. As the nation continues to navigate the evolving landscape of digital currencies, it remains to be seen how these regulations will shape the future of cryptocurrency in Uzbekistan. One thing is clear: the country is making deliberate strides toward a more controlled and environmentally conscious crypto ecosystem.