In 2018, Decree of the President of Belarus No. 8 “On Development of Digital Economy” entered into force, which, inter alia, legally recognized cryptocurrencies in Belarus. In this article we briefly summarize the main aspects of the Belarusian regulatory framework for cryptocurrencies, along with significant risks and perspectives.
By adopting the decree Belarus became one of the first jurisdictions in the world with a complex regulatory regime for businesses based on blockchain technology. It established a legislative framework for using cryptocurrencies, legalized the operation of cryptocurrency exchanges and platforms, and defined such terms as “mining,” “token,” “cryptocurrency,” and so on. While in Japan Bitcoin is recognized as a legal means of payment and in Switzerland cryptocurrencies are subject to the same regulations as foreign currencies, in Belarus cryptocurrencies cannot be considered money (whether electronic money or foreign currency) or securities, and activity related to cryptocurrencies is directly excluded from currency and licensing regulations, as well as regulations of banking and securities activity. Therefore, in Belarus cryptocurrency is considered a unique asset in a dematerialized form.
Belarusian legislation does not impose any specific restrictions or requirements for the creation, issue, storage, sale, or exchange of tokens. Legal entities can own tokens and store them in virtual wallets, but they may create, acquire, alienate tokens, and perform other transactions with them only through residents of the High Technology Park (a territory in Belarus with a special legal regime), which have the widest and generally exclusive rights in respect of cryptocurrencies, including the right to operate cryptocurrency exchanges and platforms in order to perform transactions with tokens in the interests of clients or their own interests, to create and place tokens in Belarus and abroad, and to conduct cryptocurrency mining. Any individual in Belarus can own tokens, store them in virtual wallets, and exchange them for other tokens, as well as acquiring, alienating, donating, bequeathing, and mining them.
In terms of taxation Belarusian legislation is quite liberal – activities related to the mining, creation, acquisition, and sale of tokens will remain tax-free until January 1, 2023.
Risks and Perspectives
Despite the generally positive attitude of Belarus’s Government towards cryptocurrencies, the National Bank of Belarus pays attention to the following points in respect of cryptocurrencies: (1) cryptocurrencies are not money (though tokens may be used as remuneration for verification and other transactions in blockchain) – the only legal payment unit in Belarus is the Belarusian rouble; (2) the sphere of circulation of tokens is limited, since they cannot be exchanged for any objects other than Belarusian roubles, foreign currency, electronic money, and other tokens; (3) transactions with tokens are very risky and usually speculative – risks are associated with the lack of a clear and understandable mechanism for forming their price and the absence of any proper guarantees protecting the rights and legitimate interests of tokenholders.
Nevertheless, Belarusian companies have been extremely interested in cryptocurrencies and continued improvements in this area. On November 13, 2020 the first legal cryptocurrency exchange service was launched in Belarus. Previously it was possible to exchange cryptocurrencies only on specialized exchanges, but now Belarusbank provides citizens of Belarus and Russia the option of buying and selling cryptocurrencies using Visa payment cards. Currently the service performs financial transactions only with Bitcoin, which may be exchanged for Belarusian and Russian roubles and US dollars. In the future, it plans to add additional cryptocurrencies and to expand the list of countries whose citizens will be able to exchange cryptocurrencies for Belarusian and Russian roubles, US dollars, and Euros.
Belarusian legislation in the sphere of cryptocurrencies is undoubtedly progressive: it brings together the traditional finance industry and cryptocurrencies and allows for the attracting of new investments. It is believed that blockchain technology will allow financial transactions to be made faster, cheaper, and more reliably than traditional financial channels. On the other hand, as a new instrument, cryptocurrency may bear certain risks to its holders. Despite the rapid development of the cryptocurrency market in Belarus, it is still too early to draw any legal conclusions. We believe that increased interest to cryptocurrencies and the development of a relevant practice will reveal legal gaps and any improvements needed in the near future.
By Dennis Turovets, Partner, and Anastasia Yarokhovich, Senior Associate, Egorov Puginsky Afanasiev & Partners