Key Takeaways
- Kapital Bank and Ravnaq Bank gained approval to issue UzNEX crypto cards, combining traditional banking with access to cryptocurrency exchanges.
- Uzbekistan shifts towards licensed crypto services, with local firms receiving licenses in 2022, following restrictions on unlicensed international exchanges.
- UzNEX cards, powered by Mastercard, symbolize Uzbekistan’s progressive approach, merging financial ecosystems by linking bank accounts and crypto exchanges.
Uzbekistan, a Central Asian country, has shown interest in exploring the potential of cryptocurrencies and blockchain technology. In 2022, a presidential decree led to the establishment of the National Agency for Perspective Projects (NAPP), which was tasked with overseeing the digital assets industry within the country. This decree also outlined the legal framework for cryptocurrency mining operations in Uzbekistan. Now two Uzbek Banks can issue crypto cards.
Crypto Card Approval:
In this context, two private banks in Uzbekistan, Kapital Bank and Ravnaq Bank, have been granted approval by the NAPP to participate in a digital sandbox of crypto regulation. This digital sandbox is essentially a controlled testing environment that allows financial institutions to explore and experiment with new financial technologies, like cryptocurrency-related services, under regulatory supervision.
Both banks have been given the green light to issue plastic crypto cards that will be powered by Mastercard, one of the world’s leading payment systems. These cards are specifically designed to facilitate the integration of traditional banking services with cryptocurrency-related features.
UzNEX Crypto Card:
The crypto cards issued by these banks are named UzNEX. These cards offer an innovative fusion of traditional banking features and access to a cryptocurrency exchange. Essentially, a cardholder will be able to link their UzNEX card to their bank account, and the card will provide them with access to a cryptocurrency exchange. This integration allows users to seamlessly manage their traditional fiat funds and cryptocurrency holdings through a single card.
Regulatory Context:
The government of Uzbekistan has taken a phased and cautious approach to regulating cryptocurrencies. In 2023, they began restricting the provision of crypto services to licensed cryptocurrency firms. This means that only companies that have obtained licenses from the relevant authorities are permitted to offer cryptocurrency-related services within the country.
Local crypto firms were granted licenses in November 2022, marking a significant step in legitimizing the cryptocurrency industry in Uzbekistan. Before this, the country had restricted access to major international crypto exchanges like Binance, FTX, and Huobi due to concerns about unlicensed activity.
Timeline and Future Plans:
The NAPP approved Ravnaq Bank to participate in the crypto card pilot on August 14. In May 2023, they confirmed Kapital Bank’s participation in this initiative. Both banks are expected to roll out their crypto cards to customers by the end of December 2023.
Uzbekistan’s approach to cryptocurrency regulation involves a digital sandbox where private banks, such as Kapital Bank and Ravnaq Bank, are allowed to issue crypto cards named UzNEX. These cards offer an innovative combination of traditional banking and cryptocurrency exchange access. The government’s regulatory approach, initiated by a presidential decree in 2022, involves licensing local cryptocurrency firms and legitimizing the cryptocurrency industry while maintaining a cautious stance on unlicensed crypto activity.
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