Uzbekistan’s NAPP Announces Fee Hike to Boost State Revenue from Crypto Sector

On March 19, 2024, Uzbekistan’s National Agency for Perspective Projects (NAPP) announced a significant hike in monthly fees for cryptocurrency exchanges and stores operating within the country. The updated fee structure is a revision of a mandate established in September 2022 by the Ministry of Justice, reflecting the agency’s evaluation of the sector’s profitability.

Details of the Fee Increase

Under the new fee structure, crypto exchanges are now required to pay 740 BRV (Base Rate Value), equivalent to UZS 251.6 million ($20,015) per month. This represents a substantial increase from the previous fee of 400 BRV (UZS 136 million or $10,819). Additionally, crypto stores will face a monthly fee of 185 BRV (UZS 62.9 million or $5,003), up from just 20 BRV (UZS 6.8 million or $540).

Objectives and Expectations

The primary goal of the fee hike is to significantly boost the state revenue from the rapidly growing crypto sector. The NAPP anticipates that these new fees will double the revenue generated from cryptocurrency activities, reflecting the sector’s potential to contribute substantially to the national budget.

Impact on the Crypto Sector

The NAPP has assured that the new fee structure is designed not to negatively impact the financial stability of service providers within the crypto industry. By implementing these changes, the agency aims to ensure that the sector continues to thrive while also contributing a fair share to the state’s revenues.

Regulatory Developments and Partnerships

The announcement of the fee hike follows closely on the heels of a Memorandum of Understanding (MoU) signed between the NAPP and stablecoin issuer Tether. This agreement is part of Uzbekistan’s broader strategy to explore and promote blockchain-based innovations, including stablecoins and digital asset tokenization. While specific details of the partnership remain undisclosed, Tether has committed to working with Uzbek regulators to develop a comprehensive legal and regulatory framework for crypto assets.

Historical Context and Market Dynamics

Uzbekistan has been actively working to position itself as a hub for cryptocurrency and blockchain innovation. The country’s regulatory framework for crypto activities has evolved significantly over the past few years, with the NAPP playing a pivotal role in shaping policies and ensuring compliance.

In February 2024, the NAPP made headlines by announcing legal action against Binance for operating without a license and refusing to pay an imposed fine. This move underscored the agency’s commitment to enforcing regulatory standards and ensuring that only licensed exchanges are allowed to facilitate crypto trades within the country.

Broader Implications for the Crypto Market

Uzbekistan’s decision to increase fees for crypto entities is indicative of a broader trend where governments are recognizing the economic potential of the cryptocurrency sector. By implementing a more rigorous fee structure, Uzbekistan aims to balance the promotion of innovation with the need for regulatory oversight and revenue generation.

Conclusion

Uzbekistan’s NAPP has taken a significant step by hiking fees for crypto market participants, a move projected to double state revenue from the sector. This strategic adjustment reflects the growing importance of the crypto industry in Uzbekistan’s economy and underscores the government’s commitment to fostering a regulated and profitable market environment. As the sector continues to evolve, the partnership with Tether and ongoing regulatory developments will play a crucial role in shaping the future landscape of cryptocurrency in Uzbekistan.