Governments and Central Banks of many countries of the world are leery of the digital market. It is a fact. But there are exceptions to every rule. Venezuela and Nicholas MADURO are not counted, they have nowhere to go. The president of Uzbekistan, Shavkat MIRZIEEV was the first in the post-Soviet space to sign two decrees: "On measures for the development of the digital economy in the Republic of Uzbekistan" of July 3, 2018, and "On measures to organize the activity of crypto exchanges in the Republic of Uzbekistan"of September 2, 2018. These are magical documents for the industry. They really legalize the turnover of virtual assets and the activity of operators of virtual assets.
These documents symbolize, so to speak, the come back of virtual currencies to their historical roots. It was in Central Asia where the mathematician Al-Khorezmi published the treatise “Al-Jabr-al-Mukabala”, the doctrine of relations, permutations and decisions. Yes, this is that very algebra that underlies all codes and cryptographic methods. It was about the 7th-8th centuries AD. Since then, a lot of water has flowed under the bridge.
"One should consider the following as the most important tasks for the further development of the digital economy: the introduction and development of activities in the sphere of the crypto assets turnover, including mining, smart contracts, consulting, emissions, exchange, storage, distribution, management, insurance, crowdfunding, and" blockchain" technologies for the diversification of various forms of investment and entrepreneurial activity”.
The words from the decree of the President of the Republic are as if copied from the statement of some crypto enthusiast. Exactly two months later the decree on the organization of the crypto-exchange operations was forthcoming. And in a few days - the information appeared that the official authorities of Uzbekistan and the South Korean blockchain association KOBEA had signed the joint project called "Revolution in Uzbekistan", which concentrated on the balanced growth of the digital industry in the country.
Though, there is one nuance here. Acting on the territory of this Central Asian country will be allowed only to foreign exchanges, which is more like not a revolution, but an intervention. Moreover, in order to start working, the authorized capital of a legal body must be at least 30,000 minimum monthly wages (about $432,000); at least 20,000 minimum monthly wages ($287,000) must be reserved at the company’s bank account; and the company's server (it's especially interesting for the blockchain!) should be located on the territory of Uzbekistan.
By the way, the first (according to the creators) national crypto-exchange in Uzbekistan Copay.asia appeared at the end of last year. But, of course, it is registered on the territory of another state. The volume of trading on this platform is still small. But after the president's decrees, the popularity of the cryptocurrency should increase. Moreover, the state guarantees easy transfer of the cryptocurrency into fiat.
In addition, the country's authorities are actively promoting the idea of integrating DLT-technologies into public services. A separate item of the first presidential decree is devoted to this issue.
What reasons does the leadership of the Republic have for such heightened attention to the development of the virtual market?
There are, probably, three of them. And the first one is, of course, poverty. For example, the old-age pension, in Uzbekistan is $35. This is the next to last index in the post-Soviet space. The average salary is $235. This is, of course, more than in India, but this money is still not enough for a decent life.
We already wrote that for many countries the cryptocurrency was almost the only chance to cope with the difficult financial situation of the population. It can not only create new jobs but also provide them with material resources, which do not depend on the political and economic situation inside the country. The virtual economy is transboundary and subject to global influences.
The second one is a favorable digital market condition. After China actually banned the circulation of the cryptocurrency in its territory, and India is playing it close to the edge of a ban, Central Asia can become that hole card that will bypass doubting leaders in the race for leadership in the digital market.
In this context, a step towards the legalization of cryptocurrencies can become a real breakthrough into a new economic reality for the whole region. How did the Asian industrial "dragons" begin? With just a small liberalization of the local legislation regarding foreign capital and investments. Today we see China, Japan, South Korea, and Taiwan. But, frankly speaking, these countries are the heroes of the post-industrial era. The digital era needs new influencers.
The third issue is the social capital. About 53 million people live in Central Asia at the moment. Considering the entire territory of the post-Soviet space - more than 200 million. Moreover, the occupational level of people in the production and in the service sector is low. This is a huge resource for the development of a new economy.
The only problem Uzbekistan can face in terms of developing the digital economy is a deficit of electricity. The total capacity of Uzbek power plants is 12.5GW. At the same time today, for the cryptocurrency mining, for example, 2.5GW is spent (the average European country consumes such a volume), in the future, power consumption can increase to 7.7GW. Whether the Republic will cope with such energy consumption is a big question. Moreover, now the Republic consumes almost 100% of the energy produced. Knowing this, it is difficult to hope for the rapid development of the crypto industry. Within three months, “Uzbekenergo” and “Uzbekhydroenergo” should prepare a pilot project for the development of mining in the country.
Put simply, the decrees have come out; the tasks to the government have been given. And the Republic has the prospects for the development of the digital economy, but time will tell whether the authorities will be able to cope with technical problems, and most importantly, whether the plans for the development of the digital economy will not turn out to be a common PR action.