Key Takeaways
- Uzbekistan unlikely to adopt cryptocurrencies says, top central bank official
- Behzod Hamraev notes that cryptocurrencies do not have backing like fiat currencies
- Uzbekistan has a fairly unstable blockchain regulatory policy
He added that, unlike fiat currencies that are backed by central bank assets, cryptocurrencies have no backing.
This, according to Hamraev, makes them unsuitable for payments within a formal setting.
He also cited that Central banks have an obligation to accept banknotes, and cryptocurrencies don’t carry similar weight.
The Uzbekistan government banned the use of cryptocurrencies for payments and passed it into law in 2019.
Under the law, the local fiat currency ’’sum’’ is the only means of payment and serves as legal tender in the Asian nation.
Uzbekistan has been inconsistent in its moves to regulate cryptocurrencies.
It legalized crypto trading in 2018 and licensed crypto exchanges within its region.
This move was reversed in 2019 with authorities banning the trading of cryptocurrencies and effectively led to a shutdown of several local crypto exchanges.
Fast forward to 2020, the government revealed that it was working towards setting up a national mining pool and creating an exchange for miners to sell digital currencies.
It also announced plans to develop a blockchain valley similar to silicon valley and introduce tax cuts for crypto companies.
These moves have been fairly successful, with many mining companies migrating to the Asian nation to leverage the relatively cheap electricity.
However, this latest statement from the Central bank chief effectively rules out any plans to adopt crypto-assets as legal tender.
It remains to be seen whether this notion will change in the future.
What are your thoughts on the statements from the Uzbekistan Central Bank Official?
