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Belarus: High Tech Park Releases ‘Complete Legal Regulations’ for Cryptocurrencies

The rules for operation of the cryptocurrency market in Belarus have been approved, after being released by the country’s High Tech Park.

Belarus High-Technologies Park (HTP), a national special economic zone contributing to the IT business, has established the rules for the operation of the cryptocurrency market in the country, according to documents published by HTP Nov. 30.

The regulatory documents define the requirements for various types of businesses related to cryptocurrencies and Initial Coin Offerings (ICO), as the general rules for industry regulations — Decree No. 8 “On the Development of the Digital Economy” — had already been signed last year.

The HTP, commonly known as the Belarusian Silicon Valley, was responsible for establishing the rules under which the cryptocurrency industry would be regulated in the country. Today, the HTP has published five documents: “Requirements for Applicants,” “Requirements for Cryptoplatform Operators,” “Requirements for Cryptocurrency Exchange Office Operators,” “Requirements for ICO Operators,” and “Requirements for Internal Control Rules.”

Now that these rules have been accepted, they form “a complete legal regulation of cryptocurrency in Belarus,” local Belarusian news outlet Dev.by reports. It also states:

“The cryptocurrency activities of the HTP residents received full comprehensive legislative support from the regulator. The HTP administration, together with the National Bank, the Financial Monitoring Department of the State Control Committee, international experts and other bodies, compiled and signed all the necessary documents.”

Back in the spring, the Belarus government called the digitalization of the national economy “a top priority,” because of its ability to transform “the economy, public administration and social services,” as Cointelegraph reported May 16.

Previously this fall, the deputy foreign minister of Belarus stated that Belarus aimed to establish relations with South Korean investors interested in the so-dubbed “fourth industrial revolution” technologies, focusing on artificial intelligence (AI) and blockchain, Cointelegraph wrote Sep. 6.

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Belarus Seeks South Korean Investors Interested in Blockchain and Fintech

Belarusian diplomats are seeking South Korean investors for the country’s growing blockchain and fintech industry, Korea JoongAng Daily reported September 6.

During a visit to Seoul on Tuesday, the deputy foreign minister of Belarus Andrei Dapkiunas reportedly stated that Belarus endeavors to establish relations with Korean investors interested in “fourth industrial revolution” technologies, including blockchain and artificial intelligence (AI).

In an interview with Korea JoongAng Daily, Dapkiunas noted that Belarus has developed “groundbreaking state legislation” in the IT sector, and said that the country is “making innovative strides on blockchain, cryptocurrency, start-up development and software production.”

The two countries have well-established business relations. South Korean exports to Belarus include IT products, electronics, vehicles, and construction equipment, while Belarus supplies potash fertilizers, semiconductors, optical instruments, and lasers. Dapkiunas reportedly said that “there is so much more potential for reciprocal interest between Belarus and Korea and we feel that this potential is not fully realized.” He added:

“We believe that there is a significant potential for mutually beneficial cooperation in such fields as aerospace, artificial intelligence, biotechnologies, electric and self-driving vehicles, robotics and electronics, nanomaterials and digital economy.”

Belarus clearly defined its position towards the digitization of the economy in May, when the Minister of Telecommunications and Informatization Sergey Popkov said that digital technology is considered a top priority due to its ability to transform “the economy, public administration and social services.”

In a separate statement, Chairman of the Belarusian House of Representatives Vladimir Andreichenko revealed that the country was developing a resolution promoting digital economy for a session of the Parliamentary Assembly of the Organization for Security and Co-operation in Europe.

In March, Belarus officially introduced cryptocurrency accounting standards. A document released by the Ministry of Finance defined the information needed about tokens for accounting purposes and how to categorize tokens received based on their use.

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Belarus Considers Digital Economy a Top Priority, Develops Resolution For OSCE Meeting

Belarus considers the digitization of the economy a top priority and is developing a resolution promoting digital economy for a session of the Parliamentary Assembly of the Organization for Security and Co-operation in Europe (OSCE PA), local news  BelTA reports May 15.

Speaking at the Eurasian Digital Forum, the Minister of Telecommunications and Informatization Sergey Popkov said that digital technology is considered as a top priority due to its ability to transform “the economy, public administration and social services.” Popkov further cited the recently adopted Decree on the Development of Digital Economy, that facilitates cryptocurrency-related activity.

“The adopted Decree number 8 has provided unprecedented rights for the residents of Belarus High Technologies Park (HTP) to explore such innovative technologies as blockchain, cryptocurrencies and smart contracts.”

In a separate statement, Chairman of the House of Representatives Vladimir Andreichenko revealed that Belarus is developing a resolution promoting digital economy for a session of the OSCE PA in Berlin this July. Andreichenko gave a statement about the coming session when he met with the Georgian ambassador to Belarus, Valeri Kvaratskhelia:

“…The Belarusian resolution is aimed at promoting the digital economy. It also deals with the issues of economic growth in the OSCE region, elimination of various obstacles and barriers, harmonization of standards, etc.”

The resolution has already been prepared and will require a requisite number of signatures at the Belarusian House of Representatives. Andreichenko said that the resolution will also be sent to Georgian MPs to gain their support.

Last week, local media reported that the National Bank of the Republic of Belarus (NBRB) is considering strict requirements for investing in Initial Coin Offerings (ICOs), and is planning to introduce а similar regulatory framework for crypto exchanges. ICO investments will be closed to authorized investors, who must fulfill two of four strict criteria in order to qualify.

On May 1, Cointelegraph reported that the Belarusian crypto-related decree will be updated to require certain crypto exchanges to provide customer data to authorities. A company must provide info on its management structure, client names, and communication records. The data will reportedly be stored for five years, and KYC requirements will be applied to new customers in some cases.

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Belarus: Some Crypto Exchanges Will Be Required To Hand Over Customer Data, Report Says

A crypto-related decree in Belarus will be updated to require certain crypto exchanges to provide customer data to authorities, local news outlet Forklog reports today, May 1.

Belarus’ Decree on the Development of Digital Economy is being revised to include a requirement for crypto exchanges based in the country’s High-Tech Park (HTP) to provide identifying data on their customers.

According to sources at RIA Novosti, cited by Forklog, in order to open a crypto exchange in the HTP,  a company must provide information on its management structure, clients’ names and records of communications. The data will reportedly be stored for at least five years, and in some cases KYC requirements will be applied to new customers, the publication reports.

According to RIA Novosti’s source:

“The beneficiaries must meet the reputation requirements: no criminal record, no bankruptcy proceedings against a person or evidence of bankruptcy. At least $5 million in available funds should be shown in their accounts with the source of the money confirmed.”

Forklog notes that crypto exchanges must also employ a risk manager, a specialist in regulatory compliance, and a technical director, as well as adopt current financial standards.

Forklog reported that it is unclear when these revisions will be implemented.

HTP, Belarus’s “Silicon Valley”-like tech park, offers tax breaks to participating companies until January 1, 2023, as per the March 23 signing of the Decree of Digital Economy. After the decree was signed, the number of HTP residents jumped to 88 – an increase of 25 percent. However, one current problem with operating a cryptocurrency exchange in Belarus is that Belarusian banks don’t yet have the infrastructure to engage in crypto transactions, as CT reported last month.

At the end of March, Belarus also officially introduced cryptocurrency accounting standards. This announcement falls in line with Belarusian President Alexander Lukashenko signing the Decree on the Development of Digital Economy last December, which supports blockchain and cryptocurrency development.

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Belarus-style Silicon Valley: Why Nobody Rushes Up Into Tax-Free ICOs?

The “unprecedented” Decree on the Development of Digital Economy, signed by President Alexander Lukashenko in December, officially came into force on March 28 in the Republic of Belarus. The document signals a new dawn for the country, facilitating any form of cryptocurrency-related activity, and according to the leader should make Belarus “a tech country”.

The Cointelegraph editorial visited the post-Soviet country to conduct their own investigation and find out if everything is as it seems to be at first glance and dig into the real benefits of “free crypto-economics”.

Belarusian version of “Silicon Valley”

While global competition for qualified IT professionals grows evermore fierce, Belarus offers a number of benefits to attract professionals from around the world, in particular a major incentive stemming from tax breaks until January 1, 2023. This helps to ensure foreign capital flow and ultimately a better relationship with the West.

For the purpose of creating and supporting innovative startups in the country, the government created the High-Tech Park (HTP), which becomes the mecca of the first national cryptocurrency operators.

In the global community, the new economic zone has already been nicknamed the Belarusian version of Silicon Valley. The thing is that its residents, registered IT companies, can take advantage of unique opportunities and privileges for business development at an early stage.

HTP press-center

Image source: HTP press-center

According to the innovative infrastructure’s concept author, Vsevolod Yanchevsky, the tech park will become “one of the most comfortable places in the world for conducting IT business”:

“The Decree, developed on behalf of the President of the country, really turns Belarus into one of the most comfortable places in the world for conducting IT business. Moreover, the powerful positive effect of the Decree will be felt not only by the IT sphere, but by the entire economy of the country. “

According to statistics by Belarusfeed, after the decree was signed, the number of HTP residents increased by 25 percent – in just a couple of months 88 companies received the status of residents.

HTP residents growth

Image source: Hi-Tech Park

Blockchaininvest.io reports about 90 percent of residents being offshore companies that have chosen to operate within the Belarusian economic zone for various reasons. These include free taxes, state support, low cost of full-time IT professionals, free attraction of foreign specialists and a simplified registration procedure.

The conditions offered to the residents of the park positively affect the development of the IT sector and the country’s economy as a whole. From 2013 to 2016, Belarus has been the leader of the Google Code Jam with world giants such as World of Tanks, MSQRD, Viber, Maps.me, Prisma, Apalon Apps joining the number of projects released in HTP.

The President gives a green light to cryptocurrencies

Having assisted with the development of the IT sector, the administration decided to keep pace with more progressive countries and began the process of digitalization of the economy. Known for his strict policies, the President steps into the picture to ensure the uptake of progress in the country, which has historically never been “progressive”. The strength and priority of the Decree prevails over the existing laws and can operate under any conditions.

What’s permitted?

The Decree legalizes businesses based on Blockchain-technology, as well as any activity related to cryptocurrencies and digital tokens. Unlike in other countries, such as the US, China, Vietnam and Australia, that choose to place limitations, in Belarus mining and exchange operations are not treated as “business activities” and moreover, are not subject to being taxed. According to the Clause 2.2 of the Decree of the President, December 21, 2017, No 8:

“Natural persons are entitled to possess tokens and, having regard to specific features established by this Decree, to perform the following operations: mining, storing of tokens in virtual wallets, exchange of tokens for other tokens, their acquisition, alienation for Belarusian rubles, foreign currency, electronic money, and also to donate and bequeath tokens”.

In addition, declaration of income from cryptocurrency operations is optional until January 1, 2023. This is as good a gift for the cryptocurrency community as any.

Measures of state support under the Hi-Tech Park regime

Image source: ey.com

Individual privileges are granted to organizations that are part of the HTP. They are exempt from value added tax (VAT), income tax (corporate tax) and other types of tax. Only 1 percent of the turnover is a subject of taxation.

Among other advantages are a simplified procedure for the resident registration with only two documents required for joining the HTP (business plan and foundation agreement), visa-free entrance to the country for foreign IT professionals for up to 180 days per year, permission to make transactions and sign international contracts distantly.

ICO changers: first country to legislate smart contracts

Belarus is one of the first country to provide detailed regulation of digital tokens, cryptocurrencies, ICOs, activity of cryptocurrency exchanges, and what is the most unprecedented – “a smart contract is declared to have a status of fully official document” – states Ilya Orlov, TravelChain CEO. “Many ICO-related projects are attracted by new perspectives, though do not hurry to make any steps forward.”

The privileges opened by the Decree may seen really attractive for those who have already finished their ICO or just thinking about its launch. To conduct a full-fledged token sale, the company either must be registered on the territory of the Republic of Belarus and, accordingly, have an account with a Belarusian bank, or act through HTP operators, the so-called official cryptocurrency platforms. For example, the cryptocurrency exchange Exrate.by is announced to become one of such first “national” platforms.

All operations involving cryptocurrencies, including the reception and distribution of investments will also go through specialized exchangers linked to bank accounts. In the event that a foreign company conducts an ICO through an HTP resident, the latter can transfer capital to the customer through so-called “royalties“.

Traps and discrepancies

The main problem that exists is the question of how world banks would comply with international requirements for combating money laundering and financing of terrorist activities. Despite the fact that Resolution of the National Bank of Belarus No 62, adopted on Feb. 15, provides for the criteria for determining a suspicious transaction, these corrections are still pending, with the Decree waiting to be amended.

According to the document, suspicious financial operations can be considered those in the amount close to or exceeding 1,000 units (approximately $13,000) associated with the acquisition or alienation of tokens for fiat money if there is no source of funds or in case of money received from non-residents without the participation of the resident of the HTP.

Identification of such transactions, performed with the use of bank payment cards by means of remote banking systems or the global computer network of the Internet and mobile communications, should be carried out at the next stage of control, which is also not available yet.

The state of affairs between the cryptocurrency and legal entities remains extremely complicated. Despite the welcoming Decree, the current reality is that Belarusian banks do not have the infrastructure to handle cryptocurrencies. This is problematic as organizations are forced to seek banks in the jurisdiction of other countries that already accept cryptocurrencies.

Ilya Salei, senior lawyer at Borovtsov & Salei, a member of the Advisory Council of the Association of Belarus assisting in joining the HTP, said Cointelegraph:

“There is no practice of applying these standards, as virtually no one in the territory of the Republic of Belarus has yet been engaged in the exchange of cryptocurrency or the conduct of so-called ICO.”

It is still unclear how the fulfillment of obligations to investors will be regulated. The same can be told about the procedure of ICO authorization and audit of cryptocurrency balances.

Another dispute is caused by legal, at first glance, cryptocurrency payments. Despite the fact that the Decree fully allows the use of cryptocurrencies and tokens, they “can not be a means of payment.” This means that individuals will be able to make exchanges with each other. For organizations, the state of things will not change – the provision of services and the sale of goods in the territory of the Republic of Belarus can be made only in Belarusian rubles.

Despite this, many entrepreneurs may choose to accept only 1 percent of the funds they receive in fiat money, while collecting the remaining 99 percent in the form of cryptocurrency.

According to the interactive map of Coinmap, there are about 20 merchants accepting Bitcoin in Belarus. Basically these are cafes and small shops.

Map

Image source: coinmap.org

Despite the primary legalization of the cryptocurrency industry in Belarus, the free circulation of cryptocurrencies can be carried out only within the framework of HTP. Scale full-fledged payments according to the authorities will become possible only after a successful experiment in limited conditions.

Opinion and forecasts

The government and financial structures of Belarus have high hopes for the Decree, which can turn the country into a paradise for foreign Blockchain startups, provide capital inflows and reduce the outflow of IT minds.

The startups-residents of HTP expect to replenish their ranks by 25 to 50 percent by 2020, while the profit of the accelerator itself is projected to increase to $ 1.4 bln.

HTP development forecast up to 2020

Image source: ey.com

Conclusion

Despite the fact that international experts consider Belarus more favourable in terms of tax-free privileges, many projects that have already passed the way of tokenization or just those planning ICO are still concerned about the HTP. Moreover, within three months from the entry into force of the Decree, the National Bank of the Republic of Belarus can develop a regulatory and legal framework for additional regulation of the industry, which can contain significant edits.

Maxim Galinovsky, Blockchain expert and COO at SociumTrade, told Cointelegraph:

“In general, it’s too early to speak about the revolution. The very term – revolution, implies the spontaneity of what is happening. In the context of the digital economy decree, we are talking about evolution. All participants in the cryptocurrency community need to be patient and make efforts to make this market evolve.”

The Hi-Tech Park and the government of Belarus tried their best to create friendly conditions for all the parties of the cryptocurrency market. It’s not a secret that the leaders of opinions and the authors of the Decree are under great pressure – the views of the whole world are directed at them. Conducting experiments on the scale of the whole country is a big responsibility.

The issue of regulating cryptocurrency should be solved at the interstate level, relying on unified state standards. The international legislative norms have a chance to become a basis for integration of the cryptocurrency into the existing banking system.

Earlier, the Organization for Economic Development and Cooperation called on the Central Banks of the G20 countries to work out a common approach to regulating cryptocurrencies. Until then, documents like the above mentioned decree is rather an effective political PR campaign in the international arena.

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Belarus, German Tourist Board Now Bitcoin (BTC) and Ethereum (ETH) Friendly

The tide is turning in favor of all cryptocurrencies as the German National Tourist Board and the country of Belarus are now welcoming the use of Bitcoin (BTC), Ethereum (ETH) and other cryptocurrencies.

In the first case of the German National Tourist Board (GNTB), an announcement was made on the 5th of March welcoming payments in Bitcoin (BTC), Ethereum (ETH) and other cryptocurrencies. This is an attempt by the Board to continually evolve with current digital trends and latest technologies. GNTB, being global, wants to set an example as a trend setter for innovation and a source of inspiration for the global tourist industry. This is due to the fact that cryptocurrencies are also global and erase all boundaries set on maps through their decentralized nature and worldwide popularity.

This is welcome news for crytpocurrency holders who happen to be planning trips to Germany. They no longer have to go through complex Forex exchanges that leave tourists with a felling of being ripped off after high transaction fees and ever changing exchange rates.

Belarus is also setting a precedent for other countries by legalizing all crypto related businesses in the country. A Presidential Decree on the ‘Development of a Digital Economy’ came into effect on the 28th of March this year. The decree was signed in December by President Alexander Lukashenko and became active on the said date of the 28th. By legalizing crypto related businesses such as ICO’s, crypto-mining, smart contracts and crypto-exchanges, the country is hoping to lure international entrepreneurs and corporates but on the condition of registering as residents of the Belarus High Technologies Park.

The decree goes ahead to offer tax breaks and incentives for crypto businesses until January 1st, 2023. No taxes will be imposed on any crypto related profits till then for local and international cryptocurrency entities operating in the country.

The future is indeed looking bright for global cryptocurrency adoption with the above two developments. These announcements add to the list of ever expanding crypto adoption news that is slowly but surely gathering headlines despite the market not being at its best this year.

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Belarusian Ministry Of Finance Releases Cryptocurrency Accounting Framework

Belarus has officially introduced cryptocurrency accounting standards, according to a March 6 document by the Ministry of Finance, local news outlet Jourtify reported yesterday, March 25.

The document lays out the information needed about tokens for accounting purposes, as well as how to categorize tokens received by organizations (excluding the National Bank, Development Bank, non-financial bank institutions, and various banking institutions) depending on their further use.

Last December, Belarusian President Alexander Lukashenko signed the “Digital Economy Growth” bill, which supports Blockchain and cryptocurrency development. The bill aims to streamline and remove bureaucracy that could prevent Blockchain innovation, a goal the cryptocurrency accounting standards fall in line with due to their clearer accounting instructions for crypto users.

Tokens, or “digital signs” as they are referred to in the document, purchased for the “realization of token-certified rights” will be classified under the credit categories “Settlements with various creditors and debtors” and “Other expenses and revenues.”

Tokens that are to be sold again must be classified under the “Goods” debit section and the “Settlements with contractors and suppliers” and “Current expenses and incomes” credit sections, and those obtained by crypto mining go under the “Finished Products” debit account and the “Primary Production” credit account.

An update to existing accounting standards adds that the content and type of tokens, as well as their initial value at the start of the year and the end of the reporting period, should be included.

In November of last year, Lukashenko also signed a crypto-related bill for the Belarusian High-Tech Park (HTP) that will create an economic zone modeled after Silicon Valley, allowing new technologies to develop specifically including cryptocurrencies and Initial Coin Offerings (ICO).

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Ukraine Wants A National Digital Currency, Not Its Own Cryptocurrency

The National Bank of Ukraine (NBU) has said it is “considering” introducing a digital version of its national currency, the hryvnia, that is not based on Blockchain, at least for now.

The central bank reported in a Facebook post Thursday Jan. 11 that it is studying “new and innovative technologies” as part of the country’s so-called Cashless Economy project, of which the potential e-hryvnia is a part.

The NBU drew a distinction between the digital currency it has in mind and a state-issued cryptocurrency, which would by definition be based on Blockchain technology:

“However, the National Bank would like to specify that what is meant here is the possible introduction of an electronic hryvnia, not our own cryptocurrency.”

The NBU also noted that the possibility of basing their proposed e-hryvnia on Blockchain is still up for discussion.

The plans for a digital hryvnia versus a national cryptocurrency contrast with activities across the border in Russia, whose government has been flirting with the idea of a Blockchain-based CryptoRuble since 2015.

In addition, fellow CIS member Belarus has proclaimed its intention to become a cryptocurrency-friendly zone, facilitating easier regulated exchange and attracting foreign investment.

Meanwhile, Ukraine’s cryptocurrency scene made headlines for more nefarious reasons in December 2017. The sudden police raid of crypto journal ForkLog in Odessa was followed by the kidnapping of EXMO exchange director Pavel Lerner in Kiev. Lerner has since reportedly been released for a $1 mln ransom.

Ongoing regulatory moves by lawmakers this week have also seen the creation of a dedicated working group to investigate how Bitcoin and other cryptocurrencies should be treated under Ukrainian law.

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Belarus Government Cuts Taxes For Crypto Businesses

The government of Belarus has passed new statutes aimed in part at encouraging the development of companies around cryptocurrency and blockchain.

According to the state-owned media agency BelTA, on Dec. 22 Belarus President Alexander Lukashenko signed a digital economy development decree that legally enshrines the use of emerging technologies like blockchain, while also offering significant tax incentives in a bid to attract business activity.

The decree, as summarized by a local IT firm that advocated for the legislation, boosts development of the country’s High-Tech Park, a special economic zone the government wants to serve as a hub for tech and financial startups.

One component of the law provides a legal basis for companies working on smart contract development, token issuance, cryptocurrency trading and mining – all of which would be exempt from income taxes for the next five years.

The law states:

“Turnovers, profits (income, proceeds) from various operations with tokens are not recognized as taxable items until January 2023.”

As reported in July, the country’s central bank had already been considering avenues for domestic banks to incorporate blockchain as part of a transaction guarantee system.

In another report published today, central bank chief Pavel Kallaur noted the push for the High-Tech Park to serve as a place for cryptocurrency businesses to set up shop.

“As for cryptocurrencies, the Digital Economy Development Ordinance allows resident companies of the Hi-Tech Park to use cryptocurrencies for international deals. We are okay with that,” he told BelTA.

Scissors image via Shutterstock

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Belarus Signs ‘Super Liberal’ Blockchain Support Legislation

Belarus’ president Aleksandr Lukashenko has formally signed a “super liberal” bill signaling state support of Blockchain and cryptocurrency.

As local news outlet Dev.by and others report today, Lukashenko set the wheels of Belarus’ so-called “Digital Economy Growth” package rolling Monday.

The legislation aims to remove bureaucracy which could potentially hinder Blockchain’s implementation, and gives the go-ahead to a permissive environment for cryptocurrency exchange.

In addition, Belarus’ ‘HTP’ – a Silicon Valley-style tech haven Lukashenko created – will have privileges extending to attracting funding through ICOs and using cryptocurrency in civil circulation, Cointelegraph previously reported last month.

“Today’s ratification of the digital economy by the president: the decree will be signed by the end of this year, and is a super liberal version with 100 percent absence of bureaucracy for supporting all forms of Blockchain adoption,” one IT industry insider close to the president wrote on Facebook following completion.

The Digital Economy takes Belarus a step beyond its neighbors in the race to incorporate emerging disruptive technologies. Russia, for example, has had a problematic road to adoption of cryptocurrency, with conflicting statements creating an uncertain picture of their future legal status.

Kazakhstan, on the other hand, has increasingly taken steps towards its stated goal of becoming the “Blockchain Singapore.”