The government of Uzbekistan has recently decided to ban the purchase of digital currencies by its residents.
The decision came as a surprise as the authorities of the country had so far been lenient towards digital assets.
Reported by several local news outlets, the decision has even barred citizens from buying digital currencies from licensed exchanges.
However, anyone holding any digital currency can sell their holdings, but they need to prove that the assets were gained through legal means. For any asset whose source cannot be proved, it would be illegal to transfer or own.
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Moreover, as the residents of the country can no longer purchase digital currencies, they can only sell their crypto holdings to foreign nationals on only two exchange platforms in the country, according to Forklog and Sputnik.
Some, however, pointed out the ineffectiveness of the law as digital assets can be easily bought and sold anywhere using virtual private networks (VPNs). And due to the decentralized design of such assets, it is very hard to track down their owners.
A change in stance towards crypto
Before enforcing the purchasing ban, Uzbekistan was one of the crypto-friendly nations in Central Asia. Last year, the government of the country legalized crypto trading and also introduced licensing to digital asset exchanges to ensure the legality of the industry.
The authoritarian government of the country even provided tax benefits to crypto holders as any income generated from trading digital currencies would not be taxed. Moreover, the licensed exchanges operating within the country would not be subject to existing foreign currency regulations.
As Finance Magnates reported earlier this year, the former Soviet nation was also exploring security token offerings (STOs) and was aiming to bring the regulated fundraising to Central Asia.