Uzbekistan Gives Greenlight To Mastercard-Backed Crypto Cards

The National Agency of Perspective Projects (NAPP) in Uzbekistan has authorized the launch of two private banks. The two banks, Kapital Bank and Ravnaq Bank, will issue crypto cards backed by the payments giant firm Mastercard.

Uzbekistan greenlights Mastercard-backed crypto cards

The approval for these two cards is part of a pilot program running in the country. This initiative seeks to launch virtual cards linked to crypto-based wallets. The offering will also support the instant conversion of cryptocurrencies into money, boosting crypto activities in the country.

Kapital Bank and Ravnaq Bank will offer the crypto card service as part of the Special Regulatory Sandbox Regime. The regime offers a framework that will empower some entities within the Uzbekistan crypto sector to provide specialized services.

The two banks will also launch a virtual bank card product called CRYPTO CARD – UzNEX. This card product allows customers at the bank to add funds to their accounts automatically. The offering will be supported by selling off the crypto assets based on an exchange that has partnered with the banks for this offering.

The Mastercard-backed crypto card is scheduled for a full launch in December 2023. The card will be tested on whether it is compatible with other financial systems. The testing phase will include integrating the card within the Mastercard payments platform.

“The participant of the special regime will test the solution for integrating the automated banking system, the information system of the crypto-exchange, the processing center of the bank, and the MasterCard international payment system,” the statement said.

The testing phase will determine whether the offering will work seamlessly once launched. Ravnaq Bank plans to begin the test launch by the end of October this year. On the other hand, Kapital Bank will start the test launch by the end of June 2023.

Uzbekistan employs an evolving approach to crypto regulation

Uzbekistan has been actively working on launching a clear and effective regulatory framework within the cryptocurrency industry. In May last year, the country set up the NAPP to operate as the primary regulatory agency for all the crypto activities in the country. The entity aimed to offer services like blockchain-based mining and trading.

The efforts announced by the NAPP have resulted in the launch of a new crypto-based framework. Under this new framework, only licensed virtual asset service providers can offer services in the country.

Crypto firms started securing operating licenses in November last year when the first local firms were authorized to offer crypto services. These licenses have so far been granted to seven firms offering cryptocurrency services in Uzbekistan. The NAPP also set up a new licensing framework for crypto miners enabling them to provide services in free economic areas.

In August last year, Uzbekistan halted the operations of some crypto exchanges in the country. Some of the banned exchanges include Binance and FTX, with the country’s regulator saying that these exchanges failed to comply with the set regulatory framework. The country also seeks a comprehensive legal framework for crypto-mining activities.