Tashkent, Uzbekistan (UzDaily.com) - Today, the attention of the world community is riveted on Uzbekistan, a state in the heart of Central Asia with a population of 34 million people, where, under the leadership of President of the Republic of Uzbekistan Shavkat Mirziyoyev, large-scale reforms aimed at accelerating social economic development of the country and improving the quality of life of the population.

One of the priorities of the ongoing reforms is to increase investment attractiveness and attract foreign investment, creating the most favorable conditions for doing business.

Special attention is paid to the issues of digitalization of the activities of state bodies, ensuring digital transformation and the introduction of advanced information and communication technologies in all areas. Uzbekistan strives to keep up to date and in the near future to be among the leading states in the field of creating an enabling environment for the introduction of innovative digital solutions.

And here it should be emphasized that Uzbekistan became one of the first states not only in the CIS, but also in the world, which began to regulate the use of blockchain technology and the circulation of crypto assets as part of the development of the digital economy.

In 2018, the President of the country adopted resolutions No. PP-3832 “On measures for the development of the digital economy in the Republic of Uzbekistan” and No. PP-3926 “On measures for organizing the activities of crypto exchanges in the Republic of Uzbekistan”, which laid the foundation for the legal regulation of the turnover of crypto assets.

The National Agency for Project Management under the President of the Republic of Uzbekistan (NAPU) has been appointed as the authorized body for the development of the digital economy, and the implementation and development of activities in the field of the circulation of crypto assets, including mining, smart contracts, and blockchain technologies have been identified as the most important tasks to diversify various forms of investment and entrepreneurial activity.

In addition, a bold step was taken in the form of exemption from operations and income of legal entities and individuals associated with the circulation of crypto assets, including those carried out by non-residents, from taxation.

The result was the issuance in December 2019 of the first crypto exchange license in the Central Asian region, which officially announced the beginning of its activities in January 2020.

At the same time, NAPU is taking a cautious and consistent approach in creating a regulatory environment for the circulation of crypto assets, taking into account the need, first of all, to protect the rights and legitimate interests of citizens, to prevent the use of crypto assets for various illegal purposes, including laundering money and terrorist financing.

Indeed, the lack of a single regulatory approach both at the regional and international levels in the field of crypto-asset turnover, as well as the fast pace of development of digital technologies, virtually exclude their effective legal regulation through the use of existing approaches.

In this regard, in January 2020, an initiative was put forward to create the Uzbekistan Blockchain Valley, a regulatory sandbox for the development of digital technologies at NAPU. The relevant draft NAPU document was put up for public comment.

This kind of experimental sandboxes that provide special legal regimes to their participants for testing digital technologies and developing methodological approaches to legal regulation are already used in the UK, Singapore, Malaysia, the Netherlands and the Russian Federation.

The main goals of organizing the Uzbekistan Blockchain Valley Regulatory Sandbox are to create a single platform for testing and piloting projects in the field of crypto assets and blockchain technology that are not regulated by the current legal system of the republic, the formation of new regulatory mechanisms and testing of regulatory data mechanisms, reducing the time and cost of introducing innovative digital technologies to the country’s market.

The main activities of the residents of the Regulatory Sandbox are proposed to establish:

- development and implementation of blockchain technology;

- the provision of services for over-the-counter transactions with crypto assets;

- implementation of private and industrial mining;

- activities for the conversion of crypto assets, the provision of crypto-wallet services;

- implementation of the initial placement of crypto assets (Security Token Offering);

- other activities in the field of turnover of crypto assets and blockchain technology.

To obtain the resident status of the Regulatory Sandbox, companies will have to carry out one of the activities corresponding to the areas of the Regulatory Sandbox, have their own and unique technologies (products, services) in the field of crypto assets circulation or “blockchain” technologies, offered for use and testing in the Regulatory Sandbox , or prove that an innovative approach is used in the use of well-known technologies. Also have a business plan with specific targets, a risk assessment report and an action plan to reduce them, an action plan to stop work on the project and written confirmation of potential customers about their participation in the project.

As in many sandboxes, it is supposed to provide a special legal regime for innovative projects in the field of crypto assets circulation.

At the same time, the period for the implementation of projects is limited to 12 months, with the possibility of a further extension of the term, but not more than 24 months. After the expiration of these periods or during this period, according to the results of the analysis of the project, if it is recognized as effective, a decision will be made on the introduction of approved standards in the regulatory legal acts of the Republic of Uzbekistan and the continuation of the project beyond the framework of the Regulatory Sandbox, in the case of recognition as ineffective - on termination its further implementation.

In this connection, the Regulatory sandbox is considered as a platform and an intermediate link for a smooth transition to a full-fledged turnover of crypto assets and the development of effective mechanisms for regulating processes related to the circulation of crypto assets and the introduction of blockchain technology.

It should be noted that in the process of developing methodological approaches to regulating the circulation of crypto assets, NAPU pays special attention to ensuring compliance with international standards for combating money laundering, financing of terrorism and financing the proliferation of weapons of mass destruction (FATF Recommendations).

According to experts, the intention to create a Regulatory sandbox, in general, is another progressive step and once again confirms the commitment of the leadership of Uzbekistan in actively introducing modern digital technologies for the development of the country’s economy.