Uzbekistan issues its first crypto licenses to two local Exchanges

[alastantiger]

The Republic of Uzbekistan is one of the few countries in the world with a formed regulatory framework for regulating the circulation of crypto assets. Based on the  regulatory legal acts, the Agency issued the first licenses to formally permit two "cryptocurrency retailers," Crypto Trade NET LLC and Crypto Market LLC, to provide services associated with cryptocurrencies. Under the regulations, cryptocurrency exchanges must be licensed in Uzbekistan. Licensed providers are required to verify users’ identities and store data about every transaction for five years. Forcing exchanges to get licenses allows the government to track and tax them. From January 1, 2023, Uzbek citizens and companies are legally permitted to conduct transactions only with licensed cryptocurrency exchanges. I guess Uzbek citizens who are not comfortable with being monitored will bypass any restriction by using VPN to access foreign exchanges. This is a drawback of using centralized exchanges. What do you think?

Sources -
1. https://remitano.com/news/ng/121849-uzbekistan-issues-its-first-crypto-licenses-to-two-local-crypto-stores-dot

2.https://eurasianet.org/uzbekistan-blocks-cryptocurrency-exchanges#:~:text=Under%20the%20regulations%2C%20cryptocurrency%20exchanges,licensed%20cryptocurrency%20exchanges%2C%20NAPP%20said.

3.https://napp.uz/ru/news/o-zbekiston-respublikasida-kripto-do-kon-faoliyatini-amalga-oshirish-uchun-birinchi-litsenziyalar-berildi

[kryptqnick]

Forcing KYC upon everyone and obliging exchanges to store all transactions for 5 years sound harsh. Not to mention that the legal choice for people in Uzbekistan is limited to two platforms... I guess it's not surprising, coming from an authoritarian regime, that they want to restrict and control their citizens, but still. Maybe you're right that a VPN can help avoid the requirements, though.
If only these two exchanges are legal, does it mean that storing coins in a noncustodial wallet and performing transactions directly from one address to another is illegal, or do the requirements apply only to exchanging currencies? I'm asking because the op says from the beginning of next year, only transactions on licensed exchanges are legal.

[pooya87]

The real question like in any other regulation is if the Uzbekistan government giving people any kind of guarantee that their funds are safe in the hands of these centralized companies in return for all the monitoring and taxes they pay.

I don't see any problems with regulations even full monitoring of the financial activities on exchanges and taxation on the profit made through trading. The main problem is when the government and these companies take no responsibility when things go wrong like when the exchange is hacked or when they decide to run away and scam their customers.
Even worse is when they give empty promises so that they can create a false sense of security for their customers.

[Die_empty]

The real question like in any other regulation is if the Uzbekistan government giving people any kind of guarantee that their funds are safe in the hands of these centralized companies in return for all the monitoring and taxes they pay.

This is a very intelligent question. If the government wants to control or to a large extent oversee the activities of these exchange firms, then they should also take higher responsibilities. Just as Central Banks regulates commercial banks and assist clients in the recovery of deposits when such banks goes bankrupt, the government should also insure deposited funds in these crypto exchange firms.   
The government should not just enjoy the huge tax generated by these firms and fail to protect their citizens. Sometimes most of these exchanges are connected to some powerful government officials that benefits from the raise and ultimate fall of these exchange companies.
Uzbekistanis should ensure they use these platforms for daily transactions but bitcoin investment or huge funds should always remain in non-custodial wallets.

[PX-Z]

Forcing KYC upon everyone and obliging exchanges to store all transactions for 5 years sound harsh.

I don't think so, it's not forcing either its requiring them for them to operate their business on such industry and country. Any government regulating exchanges will always monitor financial aspects to tax them. That would even be better for crypto users to convert fiat to crypto or vice versa in legal way.

Regarding the non-exchange transactions as illegal seems a bit harsh but not surprising. Although some crypto regulation do the same like this, indonesia and australia do like this if im not wrong.

[Husires]

I hope that the strictness will be in how the platforms manage the money of users and ensure that at least 30% of their money is protected if the platform goes bankrupt or there is a hack or something else.

As for tracking governments, you provide them your data, an entity will use it, either sell it to third parties or own it to government agencies.

KYC will be must for any CEX

[livingfree]

AFAIK, this country is strict and to have that crypto license to operate for the two exchanges there is a good sign of development and openness to cryptocurrencies.

Well, an exchange that's registered locally, we're for sure going to have that idea already that they're going to be friendly for those that will comply to them KYC.

Even if it's not a local exchange, almost all exchanges these days will require us for that. Only a few remaining that's okay without kyc but has a limit for its withdrawals and probably other features.