Quick Answer
Cryptocurrency is legal in Uzbekistan, but with strict regulations.
- Residents can only trade crypto through licensed providers.
- Crypto-related income is not taxed.
Legal Status of Crypto in Uzbekistan
Cryptocurrency in Uzbekistan operates within a defined legal and regulated framework, moving past its former gray-area status. While crypto-assets are officially recognized, the government mandates that residents conduct all transactions exclusively through licensed domestic providers, making the use of foreign exchanges illegal. The National Agency of Perspective Projects (NAPP) is the primary regulator, enforcing a comprehensive set of rules and anti-money laundering compliance requirements that align with international standards.
Current Regulations
As of early 2023, Uzbekistan's regulations mandate that residents can only buy and sell cryptocurrencies through licensed domestic Virtual Asset Service Providers (VASPs). Engaging with foreign exchanges is strictly prohibited and can result in criminal penalties. The National Agency of Perspective Projects (NAPP) oversees the sector, which includes specific rules for mining and the issuance of certain tokens. Notably, all crypto transactions are exempt from taxation, a policy designed to encourage the development of the local digital economy.
Regulatory Authorities
Several government bodies are responsible for the regulation and enforcement of cryptocurrency activities in Uzbekistan.
- National Agency of Perspective Projects (NAPP): As the primary regulator, NAPP is responsible for licensing all Virtual Asset Service Providers (VASPs), including exchanges, crypto shops, and mining pools. It also develops the rules for the crypto market and oversees a regulatory sandbox for new blockchain technologies.
- General Prosecutor’s Office, Ministry of Internal Affairs, State Security Services, and State Customs Committee: These agencies are primarily involved in the enforcement of anti-money laundering (AML) and crime prevention measures within the crypto sector. They collaborate on protocols for identifying, freezing, and seizing cryptoassets involved in illicit activities.
- The Central Bank of the Republic of Uzbekistan: While not a direct crypto regulator, the Central Bank oversees the country's broader framework for combating money laundering and terrorist financing. Its policies set the foundation for the AML compliance required of all financial entities, including licensed crypto providers.
Historical Context
Uzbekistan's crypto journey began in 2018 with presidential decrees to legalize and regulate crypto trading. A major policy shift in December 2019 banned residents from purchasing crypto, a move that dealt a significant blow to the local market. This restrictive stance evolved, and by January 1, 2023, regulations pivoted again. Residents were permitted to trade crypto but were now required to use exclusively licensed domestic providers. This change formalized the market under strict government oversight while making the use of foreign exchanges illegal and subject to criminal penalties, creating a highly controlled environment.
Compliance Requirements for Businesses in Uzbekistan
Businesses in Uzbekistan must adhere to a stringent compliance framework designed to safeguard the financial system. The country's regulations are built upon its national laws and harmonized with key international standards. Essential procedures are mandated by government guidance to prevent financial crime.
- AML/CFT Legal Framework: The cornerstone of compliance is the Law of the Republic of Uzbekistan No. 660-II, which addresses the legalization of criminal proceeds, terrorist financing, and the proliferation of weapons of mass destruction. The Central Bank's Financial Monitoring Department supervises compliance with this foundational law.
- Know Your Customer (KYC) and Due Diligence: As part of the broader legal requirements aligned with global standards, businesses are required to conduct customer due diligence. This includes fundamental Know Your Customer (KYC) procedures to identify and verify customer identities, monitor transactions, and understand the purpose of business relationships.
- Risk-Based Supervision: Uzbekistan is shifting toward a more dynamic regulatory model. In December 2023, the Central Bank adopted Risk-Based Supervision Guidelines, which require financial institutions to tailor their compliance efforts based on specific risk assessments.
- International Standards: The national compliance system is aligned with the Financial Action Task Force (FATF) 40 Recommendations and binding United Nations Security Council Resolutions. This ensures that Uzbekistan's regulatory environment meets international expectations for combating illicit financial activities.
Why this matters for Cross-Border Payments
For businesses facilitating payments between Uzbekistan and India, these stringent regulations create significant operational hurdles. Since all crypto transactions must pass through Uzbekistan's licensed domestic platforms, Indian companies cannot use familiar global exchanges for direct transfers. This requirement introduces friction, forcing businesses to navigate a localized and highly controlled financial system, which can lead to transaction delays and increased compliance costs.
How Lightspark Enables Compliant Crypto-Native Payments
Lightspark offers a global payments platform designed to bridge traditional finance with Bitcoin's Lightning Network. Its core products, Lightspark Connect and Grid Switch, provide access to its "Money Grid." Connect allows businesses to natively use Bitcoin for instant, low-cost transfers, handling complexities like routing and liquidity. Grid Switch enables institutions to use domestic real-time payment systems to send cross-border payments without directly managing cryptocurrency, making money move like information on the internet.
For regulated institutions navigating strict frameworks like Uzbekistan's, Lightspark provides essential tools. It facilitates compliance through features like audit-ready reporting and flexible custody options. Grid Switch is particularly crucial, as it allows entities to operate within their existing regulatory environments by using familiar domestic payment rails. This helps businesses meet their own compliance obligations while accessing a faster, more efficient global payment network.
To learn more about how Lightspark is modernizing global payments, visit their website.
Notice: This article is provided for informational purposes only and does not constitute legal advice.
Sources
- Abdulazizova, Madina, and Sherzod Abdulkasimov. "Regulation and Licensing of Crypto Custodians: Uzbek perspective." Lexology, Apr. 2025, www.lexology.com/inhouseview/legal-technology/regulation-and-licensing-of-crypto-custodians-uzbek-perspective.
- The Central Bank of the Republic of Uzbekistan. "Combating Money Laundering, Terrorist Financing, and Financing of the Proliferation of Weapons of Mass Destruction." The Central Bank of the Republic of Uzbekistan, 14 Aug. 2025, cbu.uz/en/combating-money-laundering/.
- "Uzbekistan." Hogan Lovells, digital-client-solutions.hoganlovells.com/resources/blockchain/jurisdiction-lrds/uzbekistan?s=11.
- International Monetary Fund. Monetary and Capital Markets Department. Republic of Uzbekistan: Financial Sector Assessment Program-Detailed Assessment of Observance-Basel Core Principles for Effective Banking Supervision. International Monetary Fund, 8 Aug. 2025, doi.org/10.5089/9798229019811.002.
- Klimenko, Artem, and Temur Samarov. "Uzbekistan." Elliptic, 5 Oct. 2023, www.elliptic.co/country-guides/uzbekistan.
- RFE/RL's Uzbek Service. "Uzbek Islamic Legal Authority Apologizes For 'Careless' Cryptocurrency Fatwa." RFE/RL, 4 June 2024, rferl.org/a/uzbekistan-bitcoin-fatwa-cryptocurrency-gambling/32979073.html.
- "Uzbekistan - Cryptocurrency Laws and Regulation." Freeman Law, freemanlaw.com/cryptocurrency/uzbekistan/.
