Uzbekistan

Retail_Trading_Status

Allowed-Regulated High Confidence

Analysis ID: #820
Version: Latest
Created: 2025-12-12 05:22
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Workflow Stage: Step 1

Executive Summary

Retail cryptocurrency trading is legal in Uzbekistan but strictly regulated, requiring residents to conduct all transactions exclusively through domestically licensed Virtual Asset Service Providers (VASPs). The National Agency of Perspective Projects (NAPP) oversees the sector, having issued licenses to multiple crypto exchanges and 'crypto shops' while enforcing a ban on the use of foreign trading platforms. A favorable tax regime is in place, exempting crypto transactions from taxation for individuals and legal entities, though unauthorized trading on foreign platforms carries administrative and criminal penalties.

Detailed Explanation

Retail cryptocurrency trading is legal and regulated in Uzbekistan, operating under a strict 'onshore-only' model established by presidential decrees and supervised by the National Agency of Perspective Projects (NAPP). The foundational legal framework was introduced by Presidential Decree No. PP-3832 on July 3, 2018, which legalized crypto asset activities, mandated a licensing regime for service providers, and instituted a favorable tax exemption for crypto transactions. This framework was reinforced by Presidential Decree No. PP-121 on April 27, 2022, which restructured the NAPP as the primary regulator and explicitly prohibited residents from using foreign cryptocurrency platforms, requiring all transactions to be conducted through domestically licensed entities. The operational rules for these licensed platforms, including detailed KYC/AML standards and trading procedures, are codified in the NAPP Order (Reg. No. 3379) enacted on August 15, 2022. The regulatory environment is characterized by mandatory licensing for all Virtual Asset Service Providers (VASPs), such as exchanges and 'crypto shops,' and a strict enforcement mechanism that includes blocking access to global trading platforms. To ensure compliance, Uzbekistan has enacted penalties for unauthorized trading, as detailed in the amendments to the Code of Administrative Responsibility and Criminal Code (Law No. ZRU-906) on January 19, 2024, which introduced fines and potential jail time for the illegal acquisition, sale, or exchange of crypto assets via unlicensed platforms. Consequently, while the domestic market offers a tax-free haven with 0% tax on crypto gains for both individuals and legal entities, it imposes significant limitations on asset selection and access, creating a bifurcated experience where compliant local users operate safely within a regulated ecosystem, but face legal risks if they attempt to engage with foreign exchanges.

Summary Points

I. Regulatory Status
* Retail cryptocurrency trading is Allowed-Regulated.
* The legal framework is established by presidential decrees and enforced by a dedicated regulator.
* A distinctive 'onshore-only' model is enforced, where residents must use licensed domestic platforms.
* Uzbekistan offers a 0% tax on crypto trading income for individuals and companies.

II. Key Regulatory Bodies
* National Agency of Perspective Projects (NAPP): The primary regulator overseeing the crypto sector, responsible for licensing and supervision.

III. Important Legislation
* Presidential Decree No. PP-3832 (Enacted: 2018-07-03): Foundational decree that legalized crypto activities, established the licensing regime, and introduced tax exemptions.
* Presidential Decree No. PP-121 (Enacted: 2022-04-27): Restructured the regulator (NAPP) and reinforced the legal requirement for residents to trade only on domestic licensed platforms.
* NAPP Order (Reg. No. 3379) (Enacted: 2022-08-15): Approved detailed operational rules for licensed crypto-exchanges, including KYC/AML standards and trading procedures.
* Law No. ZRU-906 (Enacted: 2024-01-19): Amendments to the Code of Administrative Responsibility and Criminal Code that introduced fines and potential jail time for illegal crypto transactions using unlicensed platforms.

IV. Compliance Requirements
* Mandatory Licensing: All crypto service providers (exchanges, shops, depositories) must obtain a license from NAPP.
* Onshore Trading Obligation: Residents are legally required to conduct all crypto transactions exclusively through domestically licensed VASPs.
* AML/KYC: Strict identity verification and transaction monitoring are required for all licensed entities.

V. Notable Restrictions or Limitations
* Strict Ban on Foreign Exchanges: Access to global trading platforms (e.g., Binance Global, Bybit) is actively blocked; their use is a punishable offense.
* Limited Asset Selection: Local licensed exchanges may offer fewer trading pairs compared to global platforms.
* Distinct Service Models: The law distinguishes between simplified 'Crypto Shops' and full 'Crypto Exchanges' with order books.
* Penalties for Non-Compliance: Engaging with unlicensed (foreign) platforms can result in administrative fines (up to ~400 USD equivalent) or administrative arrest, as per the 2024 legal amendments.

VI. Recent Developments or Notes
* The 2024 amendments to the administrative and criminal codes significantly increased the legal risks for using unauthorized platforms.
* Uzbekistan's model is highly controlled, creating a safe, tax-free environment for compliant users but legally isolating them from the global crypto market.

Full Analysis Report

Uzbekistan has established one of the most clearly defined and strictly enforced regulatory frameworks for cryptocurrency in Central Asia. The sector is overseen by the National Agency of Perspective Projects (NAPP), which reports directly to the President. Unlike many jurisdictions that tolerate offshore trading, Uzbekistan has taken a 'walled garden' approach: retail trading is fully legal and encouraged, but only if conducted through locally licensed Virtual Asset Service Providers (VASPs). This regime effectively bans residents from using global platforms like Binance (International) or Kraken, with the government actively blocking access to these sites and penalizing users who bypass restrictions.

The licensing framework is active and operational. As of late 2024 and early 2025, NAPP has issued licenses to several entities, including full-service crypto exchanges (such as UzNEX and Coinpay) and numerous 'crypto shops' (like Crypto Trade NET and Crypto Market) that function similarly to currency exchange bureaus. These licensed entities are integrated with the local banking system, allowing for seamless fiat on-ramps and off-ramps using the Uzbekistani Som (UZS). In a notable enforcement and compliance win, Binance was fined in early 2024 for operating without a license but subsequently entered the market legally in 2025 through a local licensed partner, Coinpay.

Fiscal policy regarding cryptocurrency is exceptionally favorable. Under Presidential Decree No. PP-3832, income derived from crypto transactions is exempt from taxation for both individuals and legal entities. This 0% tax rate is a strategic move to attract crypto capital and foster a domestic digital economy. However, this benefit is contingent on compliance; trading on unlicensed foreign platforms not only forfeits regulatory protection but also exposes the trader to administrative and criminal liability, with penalties introduced in 2024 including fines and potential short-term imprisonment for repeat offenders.

Despite the robust framework, the market is tightly controlled. The government views crypto assets primarily as investment vehicles rather than payment instruments; using crypto for payments for goods and services within Uzbekistan is prohibited. The regulatory environment is characterized by high confidence and strict enforcement, moving the country firmly out of any 'gray zone' and into a 'Allowed-Regulated' status where the rules are clear, licenses are mandatory, and the state actively polices the perimeter.

Uzbekistan has established one of the most clearly defined and strictly enforced regulatory frameworks for cryptocurrency in Central Asia. The sector is overseen by the National Agency of Perspective Projects (NAPP), which reports directly to the President. Unlike many jurisdictions that tolerate offshore trading, Uzbekistan has taken a 'walled garden' approach: retail trading is fully legal and encouraged, but only if conducted through locally licensed Virtual Asset Service Providers (VASPs). This regime effectively bans residents from using global platforms like Binance (International) or Kraken, with the government actively blocking access to these sites and penalizing users who bypass restrictions.

The licensing framework is active and operational. As of late 2024 and early 2025, NAPP has issued licenses to several entities, including full-service crypto exchanges (such as UzNEX and Coinpay) and numerous 'crypto shops' (like Crypto Trade NET and Crypto Market) that function similarly to currency exchange bureaus. These licensed entities are integrated with the local banking system, allowing for seamless fiat on-ramps and off-ramps using the Uzbekistani Som (UZS). In a notable enforcement and compliance win, Binance was fined in early 2024 for operating without a license but subsequently entered the market legally in 2025 through a local licensed partner, Coinpay.

Fiscal policy regarding cryptocurrency is exceptionally favorable. Under Presidential Decree No. PP-3832, income derived from crypto transactions is exempt from taxation for both individuals and legal entities. This 0% tax rate is a strategic move to attract crypto capital and foster a domestic digital economy. However, this benefit is contingent on compliance; trading on unlicensed foreign platforms not only forfeits regulatory protection but also exposes the trader to administrative and criminal liability, with penalties introduced in 2024 including fines and potential short-term imprisonment for repeat offenders.

Despite the robust framework, the market is tightly controlled. The government views crypto assets primarily as investment vehicles rather than payment instruments; using crypto for payments for goods and services within Uzbekistan is prohibited. The regulatory environment is characterized by high confidence and strict enforcement, moving the country firmly out of any 'gray zone' and into a 'Allowed-Regulated' status where the rules are clear, licenses are mandatory, and the state actively polices the perimeter.

Source Evidence

Primary and secondary sources cited in this analysis

National Agency of Perspective Projects (NAPP) - Official Website primary (regulator)

2024-01-01

"Residents of the Republic of Uzbekistan can carry out operations for the purchase, sale and exchange of crypto-assets exclusively through national service providers."

Presidential Decree No. PP-121 On Additional Measures to Develop the Sphere of Turnover of Crypto-Assets primary (official_government)

2022-04-27

"From January 1, 2023, citizens of the Republic of Uzbekistan carry out types of operations with crypto-assets... exclusively through national service providers."

Law of the Republic of Uzbekistan on Amendments to Legislation (Penalties for Illegal Crypto Turnover) primary (law_text)

2024-01-19

"Illegal acquisition, transfer or exchange of crypto-assets... shall be punishable by a fine... or administrative detention up to fifteen days."

Binance to operate in Uzbekistan through local partner Coinpay secondary (news)

2025-01-17

"Binance, remaining blocked in Uzbekistan, to operate through local partner... Operations will be conducted through Coinpay, a company licensed under the law of the country."

Uzbekistan issues licenses to crypto businesses secondary (news)

2023-11-07

"The National Agency for Prospective Projects (NAPP) of Uzbekistan recently issued licenses to crypto-exchanges, crypto-depositories, and crypto-stores."