Uzbekistan has legalized crypto exchanges in September 2018, and the same month created a fund, called the Digital Trust, to invest in blockchain-related startups and research and development.
Other than being an investment vehicle for new technology, Digital Trust is stepping on the crypto bandwagon in trying to bring security token offerings (STO) to the country.
Uzbekistan may not be on anybody’s radar, but its foray into STOs are another testament to crypto being akin to a potential godsend for raising capital in emerging and frontier nations like Uzbekistan.
Bobir Akilkhanov, investment director at Digital Trust:
“We are looking very carefully at STO and just starting to build the framework for it. We understand that ICOs were a hype tool for investors, with no assets to back up those coins. STOs are more of a legitimate investment because you can tokenize your assets. We are working on the laws to build the market. We don’t want to hurry through it and make all these mistakes and have something that is not useful.”
Right now, this is just Uzbekistan testing the blockchain waters, which is separate from the muddy crypto waters, of course. Neighboring country Kazakhstan is doing the same with blockchain so as not to miss anything. One of their core holdings in the fund is Delta City, a large scale real estate project in Tashkent with all the smart-city bells and whistles … and no tokens.
Uzbekistan traditionally attracts investors from South Korea, China and Russia. For crypto and blockchain, the ones showing interest are from China, Hong Kong, Japan, South Korea and Singapore.
Digital Trust says it ideally wants to see if they can raise money for Uzbekistan assets in STO offerings, either belonging to private or public companies. The fund is currently looking to establish partnerships with leading blockchain service providers where they can test drive a homegrown STO market.
Igor Khmel, CEO and founder of BankEx:
“Companies can raise money the old-fashioned way too, through bond offerings. But STOs are an interesting avenue because it makes some of your state assets more readily accessible to foreign investors. For the same reason you are using a smartphone instead of a rotary phone, STOs are faster, cheaper and more efficient because of the blockchain-based securitization of assets. They are easier than an initial public offering, easier than venture funding and more accessible than the bond market.”
In Uzbekistan, BankEx is the early entrant in an otherwise tiny crypto market. Digital Trust brought them there.
“Our goal is to starting our STO platform in niche markets, or niche regions like Uzbekistan,” says Khmel.
BankEx is also present in the crypto havens of South Korea and Japan. They are moving into Thailand mainly for digital-asset custody. “
“ Uzbekistan is different. We will be doing STOs there. The government wants to become a blockchain-centric government,” he says. “Each country has something unique to offer, I think. They can become one of the main markets in the region for companies considering STOs. We are taking the first steps with them to make it happen.”