By
Chimamanda U. Martha
April 29th, 2024
Central banks and financial regulators around the world are taking an increasingly aggressive stand on crypto assets and it appears that the same debate is going on in Uzbekistan.
A major spat has erupted between two senior officials in Uzbekistan over the future of crypto currency regulation in the country.
The dispute between the head of the Uzbek Central Bank and Dmitriy Li, head of the National Agency for Prospective Projects (NAPP), threatens to derail development of a crypto industry in the Central Asian country.
The row erupted earlier this year when Mamarizo Nurmuratov, chairman of the Central Bank of Uzbekistan, told a technology press conference that the government did not value crypto currencies.
Nurmuratov’s comments were seen as a direct challenge to Dmitriy Li, who has been attempting to promote a digital revolution in Uzbekistan through ventures such as the UzNex crypto exchange.
Mr Li and his NAPP agency responded angrily to the Central Bank’s intervention and issued a statement “strongly recommending” that the media ignore his rival’s comments about crypto assets.
However, Mr Li’s position is considered weak because he has failed to develop any meaningful crypto businesses in the country.
Last August, Mr Li’s NAPP effectively blocked international crypto exchanges from operating in Uzbekistan by introducing rules that required hosting of servers in the country. Binance, FTX, Huobi and Bybit had all been considering setting up operations in Uzbekistan but pulled out.
This left UzNex, which is run by a Korean company called KOBEA, with a defacto monopoly in Uzbekistan. But UzNex has failed to take advantage of its dominant position and is not even ranked on Coinmarketcap.com’s list of the leading 239 exchanges.
This is particularly embarrassing for Dmitriy Li as he reportedly has close connections to KOBEA and last October he renewed UzNex’s license for an unlimited period of time.
According to media reports, Mr Numuratov said of crypto regulation:
“I must say that the Central Bank, as well as around the world, approaches the issue of crypto-assets conservatively. We do not consider cryptocurrency to be a value asset, and our attitude towards it is negative.”
He added:
“And the fact that we have determined the existence of a crypto exchange and its regulations do not allow our residents to directly participate in the purchase/sale of crypto-assets.”
NAPP hit back with a statement saying that it was the agency responsible for development and regulation of the crypto industry.
“The Central Bank is not an authorized body in the field of turnover of crypto-assets, and its managers and representatives are not entitled to make statements regarding the sphere not regulated by it,” NAPP said.
NAPP also ridiculed the Central Bank chairman for referencing exchange rules that barred local Uzbeks from trading cryptocurrencies. Those rules changed in 2021, NAPP said.
Central banks and financial regulators around the world are taking an increasingly aggressive stand on crypto assets and it appears that the same debate is going on in Uzbekistan. Should governments be promoting the development of crypto industries or seeking a tighter regulatory framework?
Uzbek analysts believe that NAPP’s punchy response to the central bank chairman reflects the agency’s concern that it will be stripped of authority in this area having failed to develop any meaningful exchange or mining businesses.
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