The National agency of perspective projects of the Republic of Uzbekistan in accordance with the Law of the Republic of Uzbekistan “On licensing, permission and notification procedures” (hereinafter - the Law) and President decree dated July 27, 2017 # RP-3150 “On the organization of the activities of the National agency of perspective projects of the Republic of Uzbekistan”, is determined as an authorized state body for the development of crypto-assets turnover sphere, licensing of activities and permissive procedures in this domain.

Based on to the Regulation on the procedure of licensing the activities of service providers in the sphere of crypto-assets turnover (reg. number 3380, August 15, 2022) (hereinafter - the Regulation), licensing requirements and conditions for the activities of Service Providers (VASP – by FATF terminology) in Uzbekistan are defined.

Pursuant to the Law, Agency inspected and analyzed international crypto-exchanges, including “Binance” exchange, for compliance with license requirements and conditions in crypto-asset turnover sphere.

Thus, the following violations of the legislation been identified by the Agency:

– there are credible and confirmed facts on providing services to citizens of Uzbekistan without obtaining an appropriate Service Provider license on the territory of the Republic of Uzbekistan;

– transactions with anonymous crypto-assets, as well as crypto-assets and funds obtained by criminal means (theft, fraud, etc.) are conducted on the Binance's platform;

– “Binance” is not a legal entity - resident of the Republic of Uzbekistan;

– there is no electronic platform hosted on servers located in Uzbekistan;

– the requirements of the legislation of the Republic of Uzbekistan in crypto-assets turnover sphere, countering the legalization of proceeds from criminal activity, financing of terrorism and financing of the proliferation of weapons of mass destruction are not complied, as well as the one for personal data storing and usage;

– there is no any data regarding the one who is in charge in management and participating in the authorized fund (capital) of Service Providers based on subparagraph "h)" of paragraph 9 of the Regulation, as well as companies registered in offshore zones.

– there is no a formed (paid up) charter fund (capital) reserved on a separate account in a commercial bank of the Republic of Uzbekistan.

On the basis of the revealed violations, the Act of inspection of compliance with license requirements and conditions in the sphere of crypto-assets turnover was drawn up, which was sent to the “Binance” crypto-exchange for acquaintance and taking measures to eliminate violations.

“Binance” crypto-exchange did not take appropriate measures intended to organize its activities, including obtaining the appropriate license of service provider, in the territory of the Republic of Uzbekistan.

In this regard, the Agency, in accordance with the Law, made a decision to impose a fine in the amount of 300 basic calculated amounts, which was sent to the “Binance” crypto-exchange and the regulator of the jurisdiction in which the company is registered.

Reference: according to Article 55 of the Law “On licensing, permission and notification procedures”, within one month from the date of sending the decision to impose a fine, the offender may voluntarily pay the amount of the fine stipulated in this decision.

If the offender fails to voluntarily pay the amount of fine, the authorized body shall, within five working days, in accordance with the established procedure, file an application with the court for the recovery of the fine.

In addition, the legislation of the Republic of Uzbekistan provides for administrative and criminal penalties for engaging in activities without a license.

The Agency reminds citizens of the Republic of Uzbekistan that in accordance with subparagraph “e” of paragraph 3 of the Resolution of the President of the Republic of Uzbekistan dated July 3, 2018 № RP-3832 “On measures to develop the digital economy and the sphere of crypto-assets turnover in the Republic of Uzbekistan” from January 1, 2023, citizens and legal entities of the Republic of Uzbekistan can carry out transactions for the purchase, sale and (or) exchange of crypto-assets exclusively through national service providers in the manner prescribed by legislative acts.