Uzbekistan turns its back on crypto, bans the token purchase

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Updated on Mar 11, 2020

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Uzbekistan's government recently surprised the crypto community by announcing that purchasing digital coins is now fully banned.
The country's traders and investors are no longer able to legally buy cryptos, even when it comes to two licensed exchanges.
They can still sell the coins that they currently own, but only if they can prove that the coins were obtained legally.

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Uzbekistan was never considered one of the crypto hubs among the countries of the world, but it was on its way of becoming one. Now, it appears that this will never become its future, as the country’s government recently decided to ban the purchase of cryptocurrencies.

The move was quite a surprise for the members of the crypto community around the world, particularly as it came abruptly, and with no warning or trigger. According to the decision, Uzbekistan’s citizens are no longer allowed to buy crypto, even when it comes to fully regulated and licensed exchanges.

Fortunately, the government recognized that its citizens likely have significant crypto holdings, and it was willing to allow them to sell back their coins and cash out. However, this too comes with a catch, as the coin holders have to prove that they obtained their crypto legally. If they cannot provide such proof, the coins would be illegal to own, as well as transfer.

The country has two major exchanges that are fully regulated and licensed — Sputnik and Forklog. Both of these platforms can be used for selling the coins.

Meanwhile, many of the country’s investors and traders are unwilling to give up on crypto, pointing out that technologies such as VPN can allow them to keep dealing with digital coins. Further, thanks to the decentralization of digital currencies, tracking down digital assets’ owners is very difficult, provided that they play their cards right.

Uzbekistan’s decision in contrast with the country’s former crypto stance

As mentioned, the decision to buy crypto purchase came abruptly, as one of the crypto-friendliest of Central Asian countries shut its door on crypto completely. Prior to the decision, the country’s government fully legalized crypto trading, and it even licensed two of Uzbekistan’s largest exchanges.

Meanwhile, crypt holders were provided tax benefits, and none of their income obtained from digital currencies was subjected to taxation. It is unknown what led to the decision, but Uzbekistan’s chance to become a major crypto/blockchain haven seems to have been lost entirely.