Uzbekistan -- Stablecoin Regulations Regulatory Overview

Uzbekistan has been actively developing its regulatory framework for virtual assets, primarily through the National Agency for Perspective Projects (NAPP) under the President of the Republic of Uzbekistan. While there isn't a specific, dedicated law solely for "stablecoins," they generally fall under the broader classification of "virtual assets" or, in certain circumstances, e-money or securities, depending on their characteristics.

Here's a breakdown of the regulatory framework:

Key Regulatory Bodies:

1. National Agency for Perspective Projects (NAPP): The primary regulator for the circulation of virtual assets, including licensing of Virtual Asset Service Providers (VASPs).
2. Central Bank of the Republic of Uzbekistan (CBU): Regulates payment systems, e-money, and banks. It would be involved if a stablecoin is classified as e-money.
3. Capital Market Development Agency: Oversees securities markets. It would be involved if a stablecoin is classified as a security.

Key Legislation and Regulations:

1. Presidential Decree No. PD-4611 "On measures to improve the regulation of the virtual assets turnover" dated February 18, 2022.

   • Source (Russian): https://lex.uz/docs/5863953
   • This decree laid the foundation for the regulation of virtual assets and established NAPP's role.

2. Resolution of the Cabinet of Ministers No. 648 "On approval of the Regulations on the procedure for circulation of virtual assets" dated September 18, 2022.

   • Source (Russian): https://lex.uz/docs/6188439
   • This document defines key terms and sets out general rules for virtual asset circulation.

3. Resolution of the Cabinet of Ministers No. 649 "On approval of the Regulations on the procedure for licensing the activities of virtual asset service providers" dated September 18, 2022.

   • Source (Russian): https://lex.uz/docs/6188481
   • This details the licensing requirements for entities dealing with virtual assets.

4. Law of the Republic of Uzbekistan "On Payments and Payment Systems" dated November 1, 2019.

   • Source (Russian): https://lex.uz/docs/4579450
   • Relevant for e-money classification.

Stablecoin Classification:

Uzbekistan's legal framework for virtual assets (primarily CM Resolution No. 648) defines a "virtual asset" as: "an aggregate of digital records, secured by cryptographic means, that have value and/or are a claim on value and are traded or transferred using blockchain technology, and that are not securities, e-money, or derivatives."

This exclusion is critical for stablecoins:

• As Virtual Assets: Most stablecoins, especially those backed by fiat currency or other assets but not issued by regulated e-money institutions, would likely fall under the NAPP's "virtual asset" classification. This is the default for a broad range of crypto assets.
• As E-money: If a stablecoin is explicitly backed 1:1 by a fiat currency, issued by an entity that obtains an e-money issuer license from the Central Bank, and functions as a stored monetary value for making payments, it could be classified as e-money under the Law "On Payments and Payment Systems." This would subject it to CBU regulation, not NAPP.
• As Securities: If a stablecoin represents a claim to profits, ownership rights, or debt obligations in a way that resembles traditional financial instruments, it could be classified as a security and fall under the Capital Market Development Agency's oversight. This is less common for typical stablecoins but possible for certain asset-backed tokens.

Conclusion on Classification: The primary classification for stablecoins in Uzbekistan is likely as "virtual assets" regulated by NAPP, unless their specific features bring them under the CBU's e-money regulations or the Capital Market Development Agency's securities regulations. Uzbekistan does not have a distinct "payment token" classification for stablecoins separate from e-money or virtual assets.

Reserve Requirements:

• For Virtual Assets: The NAPP framework for virtual assets (CM Resolutions No. 648 and 649) does not impose specific reserve requirements on the issuers of stablecoins classified solely as "virtual assets." The focus is on licensing VASPs and ensuring compliance with AML/CFT rules. Reserve backing would be a matter of the issuer's terms and conditions, not a regulatory mandate for this classification.
• For E-money: If a stablecoin is classified as e-money, the Central Bank of Uzbekistan's regulations for e-money issuers would apply. These typically include prudential requirements such as safeguarding user funds by holding them in segregated accounts with credit institutions, often with a 1:1 backing in fiat currency or highly liquid, low-risk assets.

Issuer Licensing:

• For Virtual Assets: Any entity acting as a Virtual Asset Service Provider (VASP), which includes activities like issuance, exchange, storage, and management of virtual assets (including stablecoins classified as such), must obtain a license from NAPP. CM Resolution No. 649 details the licensing procedures, requirements (e.g., minimum charter capital, qualified personnel, robust IT infrastructure, AML/CFT compliance).
• For E-money: If a stablecoin is classified as e-money, its issuer would need to obtain a license from the Central Bank of Uzbekistan as an e-money issuer under the Law "On Payments and Payment Systems."
• For Securities: If a stablecoin is classified as a security, the issuer would likely need appropriate licenses from the Capital Market Development Agency.

Redemption Rights:

• For Virtual Assets: The NAPP framework for "virtual assets" does not explicitly mandate redemption rights for virtual assets in general. Redemption at par would depend entirely on the terms and conditions set by the stablecoin issuer.
• For E-money: If classified as e-money, users would have a statutory right to redeem their e-money at par for fiat currency from the issuer at any time, as per the Central Bank's regulations.

Algorithmic Stablecoin Rules:

• Uzbekistan's current legal framework does not contain specific rules or prohibitions for algorithmic stablecoins. They would likely fall under the general definition of "virtual assets" if they are not backed by traditional assets in a way that would classify them as e-money or securities. The NAPP framework is broad enough to encompass various types of virtual assets.

CBDC Interaction:

• The Central Bank of Uzbekistan (CBU) has been exploring the possibility of issuing a Central Bank Digital Currency (CBDC). The CBU has conducted pilot projects and investigations into the feasibility and potential impacts of a digital soum.
• While a CBDC would be a distinct digital form of the national currency (Soum), issued and guaranteed by the CBU, its interaction with private stablecoins is not yet specifically defined in legislation.
• A CBU-issued digital currency would likely operate under a separate regulatory framework as legal tender. Its introduction could potentially compete with or complement private stablecoins, particularly those pegged to the Soum, but there are no specific rules governing this interaction currently.

In summary, Uzbekistan's stablecoin regulation is primarily driven by its broader virtual asset framework under NAPP, with potential for reclassification under existing e-money or securities laws depending on the stablecoin's specific design and backing. The framework is still evolving, reflecting a cautious but open approach to digital assets.