Blockchain Investors Mark Belarus on Their Expansion Maps
Interest in blockchain technology and cryptocurrencies in Belarus has spiked and numerous foreign investors are in talks with Belarusian entities to expand their operations to this market.
This is how the market reacted to decree No. 8 on the development of digital economy, signed by Belarusian President Alexander Lukashenko last December. The regulation is to enter into force in late March, legalizing among others cryptocurrency payments, mining and initial coin offerings (ICOs) in Belarus. The move is part of the government’s plan to turn the country – which has been ruled by Lukashenko with an iron fist since 1994 and was listed by the US as Europe's only remaining "outpost of tyranny" in 2005 – into a regional hub for blockchain investors.
Belarus-born Ignat Bobrovich, CEO and co-founder of the e-sports ecosystem provider TwoGNation registered in Estonia, who follows developments in Belarus, told Cryptonews.com that the Belarusian government is currently finalizing work on the regulation's implementation, but that many industry players already believe the decree could bring a breakthrough for the country’s crypto and blockchain community.
"This regulation legalizes blockchain services, cryptocurrency mining and exchanges, and ICOs. One of the most important factors here is that not only does Belarus say these operations are legal, but they are also tax-free for the next five years. This is likely to incentivize many businesses to take up such activities," Bobrovich said. "With this decree in force, digital tokens will become part of the economy."
New business opportunities
According to Bobrovich, the regulation could also create additional streams of revenue for local businesses, as for instance, "advertisement agencies will be allowed to accept cryptocurrency payments in fiat currencies.”
TwoGNation’s CEO said that, even before entering into force, the decree has already generated a growing interest in blockchain in various sectors that await new business opportunities.
"In Belarus, we are seeing a huge increase in the demand for people who can work on blockchain solutions, and this is not only related to developers, but also lawyers and managers, and also other specialists," Bobrovich says. "Foreign investors are reaching out with proposals, they want to network and meet to discuss projects with Belarusian companies. Some law firms see this as a chance to expand to a new specialist field, and capture part of a growing market. The situation is very dynamic."
In addition to the benefits the decree could generate for the Belarusian blockchain community, the co-founder of TwoGNation says that the new regulatory framework could also facilitate the development of his own company by enabling it to add new services to its portfolio.
What you need to know about the new Belarusian regulation:
- It is scheduled to come into force three months following its official publication, i.e. on 28 March 2018.
- It introduces definitions for cryptocurrency, digital token, virtual wallet, cryptocurrency mining, ICO, cryptocurrency exchange, cryptocurrency operator and other key terms for the industry.
- It provides Belarus-based individuals the legal right to mine, own, buy, sell, bestow, bequeath tokens and to keep tokens in virtual wallets. Mining by individuals is not considered an entrepreneurial activity, and it will be exempt from personal income tax until 1 of January 2023.
- It extends the special Hi-Tech Park (HTP) tax status until 2049. This means the businesses that enjoy this status will not be subject to the VAT and corporate income tax imposed on regular companies in Belarus. Personal income revenues from companies with HTP tax status are subject to a 9% tax rate, instead of the country’s standard 15% rate, and a regular 35% personal income and social tax rate.
- It provides companies with HTP tax status with the legal right to issue and perform transactions as cryptocurrency operators, but are required to deposit USD 500,000 into a Belarus-based bank account. Cryptocurrency exchanges are required to deposit USD 100,000 into a Belarusian bank account.
- It allows companies with HTP tax status to benefit from VAT and income tax exemption for any token activity turnover until 1 January 2023. Companies that do not have this status are exempt from the VAT on token alienation turnover, and the income tax on token alienation through exchanges for other tokens until 1 January 2023.
Source: Analysis by Ignat Bobrovich