The Korean Blockchain Business Association (KOBEA) and the government of Uzbekistan have signed a memoranda of understanding (MoU) to determine the country’s first government-licensed crypto exchange.

The National Agency of Project Management (NAPM) under the president of the Republic of Uzbekistan settled a direct partnership with KOBEA to facilitate the growth of the country’s cryptocurrency and blockchain sector.

In the years to come, the govt. of Uzbekistan can contribute to the establishment of a large-scale fund to finance innovative startups and projects in the technology, cryptocurrency, and blockchain industries.

Motivation Behind the decision

In 2012, Uzbekistan was officially delisted as a Specially designated global Terrorist under executive Order 13224, that has allowed people and businesses in the United States to engage in financial transactions with companies and monetary institutions in Uzbekistan.

Throughout 2018, countries like Iran and Turkey have seen a fast increase in demand for cryptocurrencies because of the tightening of sanctions imposed by the United States government and the devaluation of their national currencies.

However, given the absence of sanctions by both the United States government and the EU in the region, it's evident the choice of Uzbekistan to open its economy for crypto and blockchain connected ventures has no association with its relationship with the United States and the current financial state of the country.

Rather, as Uzbekistan government officials from NAPM noted, the govt. has come to consensus to develop and build a friendly ecosystem for crypto startups after evaluating the success of Malta and Switzerland’s Zug in luring blockchain-related businesses with sensible regulatory frameworks.

Malta, a country within the EU characterized as ‘the blockchain island’, has recently seen three multi-billion dollar corporations relocate their headquarters to Malta because of its favorable cryptocurrency policies.

Revolut and Binance have permanently established new headquarters in Malta, bringing in hundreds of employees and hundreds of millions of dollars in monthly profits into the region. Tron, a major blockchain project, is anticipated to migrate to Malta in the coming months.

To compete against Malta, South Korea’s Busan, Jeju Island, Switzerland, and different major crypto markets, the govt. of Uzbekistan has said that it'll establish large-scale research and development centers, mining city in Chorvoq, and efficient banking relations for cryptocurrency exchanges.

Will Favorable Crypto Policies be Enough?

The Philippines, South Korea, Malta, Switzerland, Singapore, Thailand, and plenty of countries in Europe have already introduced cryptocurrency-friendly policies to accommodate blockchain startups.

Merely imposing practical regulatory frameworks won't be sufficient to convince companies that are based in regions with vibrant crypto communities.

But, the optimistic stance of the govt. towards various sectors of the cryptocurrency market as well as initial coin offerings (ICOs), mining, trading, and development will likely lead large-scale startups in the area to consider establishing offices in Uzbekistan as a secondary choice.

As seen in the case of Malta, the method of the crypto industry of Uzbekistan evolving into the size of its competitors in Asia and Europe may take several months to years. depending on the government’s efforts and commitment, the recent project deployed by NAPM could allow the country to be recognized as an rising technology hub in Central Asia.