NAPP Proposes Fines for Unlicensed Foreign Crypto Service Providers

Tashkent, Uzbekistan (UzDaily.uz) — Uzbekistan's National Agency for Perspective Projects (NAPP) has drafted regulations establishing procedures for imposing fines on foreign legal entities that illegally provide crypto-asset services to residents of Uzbekistan.

The draft was prepared in accordance with presidential resolutions of 27 July 2017 on the organisation of NAPP's activities and of 3 July 2018 on the development of the digital economy and the crypto-assets sector.

Under the proposal, fines will be calculated in the national currency and divided equally between the state budget and NAPP's treasury accounts. Payment of a fine will not exempt a foreign company from any other liability under the legislation governing crypto-assets.

The highest proposed penalty is 25,000 base calculation values (BCVs) for carrying out crypto-asset activities in Uzbekistan without the required licence.

A fine of 15,000 BCVs is proposed for violations of personal data storage and processing requirements, as well as breaches of legislation on combating money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction.

Violations of advertising regulations related to crypto-assets would be punishable by a fine of 10,000 BCVs.

According to the draft, decisions on imposing fines would be made by the director of NAPP or a deputy director based on recommendations from a special working commission composed of an odd number of agency employees. When reviewing cases, the commission would consider the frequency and duration of violations, their impact on crypto-asset market participants and any remedial measures already taken by the foreign company.

The draft also establishes limitation periods. A fine could be imposed no later than six months after a violation is discovered and no later than three years after it was committed.

Following a decision, NAPP would send the company an official notice within three working days specifying the amount of the fine and payment details. Companies would have 15 days from receipt of the notice to pay. If payment is not made, the agency intends to seek compulsory enforcement through the courts.

The proposal also gives foreign companies the right to challenge NAPP's decisions. Appeals may be submitted to the agency's Appeals Council within 15 days of receiving the notice or filed directly with a court.

The Appeals Council would be required to consider complaints within 15 days, and the deadline for payment of the fine would be suspended while the appeal is under review.

The draft also allows NAPP to publish information in the media about identified violations and the fines imposed on foreign companies.