Welcome to the Blockchain & AI Forum, where your technology questions are answered! Today’s question: are blockchain and crypto currency adoption all the rage in Uzbekistan?
Seventeen years. Yes, only 17 years. In just 17 years, blockchain based projects, including bitcoin, starting from nothing, and all the while battling powerful incumbents, have spread far, wide, and fast to reach places, and spaces, that are distant and unfamiliar to most Westerns. Today, I’ll highlight just one example of this phenomenon, the nation of Uzbekistan. Let’s start with the obvious—where is Uzbekistan?
Uzbekistan is located in Central Asia. Along with Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan, they were all former USSR republics. Uzbekistan was part of the ancient silk road–a trade networks that connected China with Western Europe. Although the silk road occurred more than half a millennia ago, Uzbekistan remains connected to the broader world, this time via blockchain and crypto-currency. Let’s jump five centuries to the 21st.
Setting the Regulatory Stage: The National Agency of Perspective Projects, (NAPP) is the government body that regulates and licenses crypto in Uzbekistan. In 2022, Uzbek President, Shavkaat Mirziyoyev, ordered NAPP to develop crypto regulations. NAPP listened and took action. By early 2023, crypto regulations were in place; by year’s end the first crypto license was issued! Impressive. Hold on, the news gets better. Earlier this year, NAPP authorized Biance, the world’s largest crypto currency exchange, to offer services in Uzbekistan. Customers are now able to deposit and withdraw funds in the national currency, the Soum, and conduct a wide range of transactions. More on that in a moment.
What Happened After Crypto Regulations Were Adopted: Since adoption of clear and reasonable crypto regulations, development and usage of crypto in Uzbekistan has skyrocketed. According to Coin Geek, a journal dedicated to the crypto world, Uzbekistan lacked behind its four Central Asian neighbors prior to 2022. Not anymore. Now it’s a leader. As of this date, there are 15 licensed firms in Uzbekistan and total transactions surpassed $1B in 2024. Awesome. Moreover, over 500,000 Uzbeks have digital assets—about 2% of the population. The Uzbek government collected over $3M in fees and revenues in 2024. This year the government announced an increase in crypto related fees. What a surprise! Lol.
Why Crypto Surged—3 Reasons: Did a crypto friendly government policy trigger the crypto tsunami? In part, yes. When Uzbekistan created clear and stable regulations there was a favorable market reaction. However, government regulations did not create demand; a market for these assets and products existed a-priori. Crypto in Uzbekistan, and in every nation, is a counter narrative to the existing status quo and a solution to market demand. I’ll give you three specific reasons for the flood of crypto in Uzbekistan, starting with seamless cross-border transactions.
Uzbekistan has a long history of cross-border finance transactions, going all the way back to the silk road, as previously noted. United Nations data reveals that in 2024, $14B worth of remittances occurred in Uzbekistan. Stable-coins facilitate fast, easy, and affordable cross border transactions, hence the demand for crypto.
Reason two is inflation. Inflation in Uzbekistan ran at 10% in 2024. Inflation is effectively a “hidden tax” because it erodes purchasing power of middle/lower-income families. Almost all stable coins are denominated in U.S. dollars. Therefore, although the has been inflation in the US, it is nowhere near 10%, hence that makes dollar based stable coins a hedge against currency inflation.
Third reason is speculation, plain and simple. An honest analysis must acknowledge reality—many crypto projects amount to gambling and speculation. Not a judgement; just an honest assessment. Apparently folks in Uzbekistan like risk and freedom to choose.
Time to end with a proverb from Uzbekistan, where they say: “it is not the eyes that are blind, but the heart”.
Until next time,
Yogi Nelson
Blockchain & AI Forum 