In a recent report the government of Uzbekistan revealed plans to adopt restrictive measures in crypto mining. A bill on licensing crypto mining activities has been discussed in several Uzbekistan legislative bodies.
In an exclusive interview with a local newsroom, the National Agency for Perspective Projects (NAPP) provided a new bill in regulating crypto mines. The report demonstrated that the NAPP will lead other regulators in monitoring the mining activities.
Uzbekistan Restricts Crypto Mining to Legal Entities
In particular, the NAPP will restrict crypto mining to only legal entities. The restriction aims at promoting a safe and secure crypto mining sector.
Beyond this, the new provision will require eligible crypto miners to migrate to renewable energy sources to reduce the emission of greenhouse gasses. The NAPP will also mandate all the local miners to utilize solar power to mine crypto assets such as Bitcoin (BTC).
However, the new legislation on crypto mining will allow the miners to utilize non-renewable energy sources under certain conditions. Even though the NAPP failed to disclose the condition for utilizing electricity in mining crypto, the Uzbekistan authority aims to maintain a balanced supply and demand for energy.
Impact of Power Shortage on Crypto Mining Industry
Earlier this year, Uzbekistan was forced to hike its utility price due to high consumption of energy during the winter season. The report claims that the Uzbek authority witnessed a slump of 8% to around 10% of the total energy supply this year.
The power outages challenged the Uzbek government to formulate a policy that balances the national power grid. Reportedly, the energy reforms aimed at developing alternative energy sources to meet the high power demand.
Also, the Uzbek authority implemented policies that support the country’s expansion of renewable energy capacity. According to the proposed policies, crypto miners in the region will be required to establish a modern structure for storing the mining equipment.
Additionally, the Uzbekh regulators restricted crypto mining in different parts of the country. The miners are only allowed to mine in designated stations.
The miners must also report the mining fees and related costs to the relevant authority within a stipulated time. Guided by Uzbekistan consumer protection laws, the NAPP prohibited mining anonymous cryptocurrencies to ensure transparency and financial integrity.
Occasionally, anonymous cryptocurrencies are commonly used to hide transaction details. The Uzbekh regulators have banned the mining of anonymous cryptocurrencies such as Monero (XMR), which allows users to transact without revealing their details.
Review of New Crypto Bill
Moreover to establish a mining facility in Uzbekistan the investor will be required to comply with the licensing requirements. The miners will be required to receive a mining permit to operate as a compliant entity. The regulator will also prohibit the unlawful circulation of crypto asset and have urged the public to comply with the new rules.
Even though it’s still unclear whether the NAPP new provision will be implemented into law, several legislative agencies have been exploring ways to regulate the crypto-mining sector. Last year, President Shavkat Mirziyoyez signed a bill on crypto assets into law.
President Mirziyoyez appointed Perspective Projects Agency (former National Agency for Project Management) to oversee the running of the crypto sector. Also, the president demanded all crypto exchanges, miners, and custodial service providers comply with the registration process.
Under the new rules, which took effect in January this year, Uzbekh investors must be allowed to trade their crypto assets on local exchanges and fulfill know-your-customer (KYC) requirements. Consecutively registered Uzbekistan-based crypto exchanges will be required to keep proper records on transaction data.
