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Belarus Aiming for More Control Over Digital Economy, Crypto Exchanges: Report

Belarusian protestors used bitcoin to support each other after a controversial election last year.

Mar 16, 2021 at 4:36 p.m. UTC
Updated Sep 14, 2021 at 12:27 p.m. UTC

Belarus President Alexander Lukashenko mentioned cryptocurrencies during his meeting with senior government officials on Tuesday, saying the current regulation of the industry should be changed, according to a local news agency.

Lukashenko said the government, the National Control Committee and the country's central bank should "clarify some regulatory norms and establish necessary control" over crypto usage in Belarus, Belarusian news agency Belta reported. The country should also establish a special governmental body to control the development of digital economy, using China's regulatory practices as an example, Lukashenko said.

The discussion followed the recent use of bitcoin as a tool for dissidents in Belarus.

Cryptocurrencies have been regulated in Belarus since 2017, and there is one locally registered crypto exchange, Currency.com.

Lukashenko added there haven't been any notable cases of criminal usage of crypto in Belarus, but "there have been new rules established in the world recently to prevent money laundering, terrorism financing and any encouragement of criminal activities" using crypto, Lukashenko said.

In response, Deputy Prime Minister Nickolay Snopkov suggested the country's government-backed IT incubator, the Belarus Hi-Tech Park, should be tasked with supervising the nation's cryptocurrency services.

The Hi-Tech Park, an incubator offering tax benefits for IT startups in Belarus, has recently became a hotbed of protest after Lukashenko won the presidential election in August, provoking nationwide protests that are continue. Many IT entrepreneurs took part in the protests, calling for Lukashenko, the authoritarian leader of Belarus for more than two decades, to quit. Many have had to leave the country, including the founder of the Hi-Tech Park and Lukashenko opponent Valery Tsepkalo.

Some supported the protestors with crypto. BYSOL, a nonprofit of Belarusian IT entrepreneurs, has distributed over 2 million euros in bitcoin (or more than $2.8 million) to people who lost their jobs as a result of their protest activities or quit their government jobs in protest. BYSOL transferred $1,500 grants to verified applicants for help, using bitcoin as a way to circumvent the financial surveillance.

Eugene Romanenko, Belarusian crypto expert, believes Lukashenko understands the limits crypto puts on his power: "Apparently, he was briefed that the government can't financially control Belarusians because of cryptocurrencies, but he wasn't told that this technology can't be destroyed."

Any new regulatory ideas from Lukashenko would include easing the rules for people supporting the regime and clamping down on others, Romanenko said. Digital economy and IT startups are considered a source of money for the country's small economy, but Lukashenko actually can't neither understand nor control them, he said.

"Economically, Lukashenko is totally dependent on [Russia's president, and Lukashenko's largest creditor, Vladimir] Putin, in everything but the digital tech," he added. "So we are most likely watching his desperate attempts to find the funds for Belarus' economy and repressive state somewhere other than in Russia, and at the same time he's trying to tighten his grip on IT so that it stops evading his control."

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