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Belarus, a country wedged between Russia and the European Union, recently legalized cryptocurrencies and Initial Coin Offerings (ICOs), in a move that’s set to drive private sector growth and attract foreign investors to the country, a former communist republic that’s still dominated by its state, filled with inefficient enterprises, and dependent on its neighbor Russia’s money and subsidies.
Bitcoin’s current crash, that’s already led the cryptocurrency below the $11,000 mark before it bounced back to $12,401 at press time, seemingly didn’t put off the country’s president, Alexander Lukashenko, who signed the decree on Friday while on the move.
The decree notably gives cryptocurrency enthusiasts tax breaks and legal incentives, as its goal is to help turn Belarus into an international tech haven, Bloomberg reports. In a statement Lukashenko, a former collective farm manager who’s in the past labeled the internet “garbage,” said:
“Belarus will become the first government in the world that opens wide opportunities for the use of blockchain technology (…) We have every chance of becoming a regional center in this area.”
Designed to attract cryptocurrency entrepreneurs looking to avoid regulatory scrutiny over cryptocurrency transactions and ICOs, the decree also exempts revenue and profits from all operations using cryptocurrencies for the next five years.
Speaking to Reuters, Anton Myakishev, the head of Microsoft’s offices in Belarus, stated that “the decree is a breakthrough for Belarus” as it gives the industry the “possibility to make a leap forward in its development,” while allowing foreign capital to enter it in comfortable conditions.
Creating a “Tech Nation”
Earlier this month, Lukashenko said that his goal in signing the decree is to turn Belarus into a “tech nation.” Not only does it legalize cryptocurrencies and ICOs, it also allows local IT companies to partly operate under English low, so it’ll help foreign investors who struggled to navigate the country’s legal system.
Denis Alinikov, a senior partner at private law firm Aleinikov and Partners, who helped draft the decree, stated:
“We regularly faced legal problems. When a Western company buys a Belarussian company they try to structure the deal outside Belarus. Investors don’t want to deal with Belarussian legislation.”
The decree further establishes a direct legal link between token issuers and their obligations towards its holders. To protect against fraud, it sets capital requirement for cryptocurrency exchange operators, while introducing smart contracts in the country.
The IT sector is one of the few that’s thriving in Belarus, as it attracts foreign workers who work for about five times the country’s average wage in its so-called Hi-Tech Park. It’s arguably the most prominent sector of the country’s economy, which is set to grow by 1.7 percent this year, according to Reuters.
Notably, Belarus was home to popular messenger application Viber, as well as the online gaming service World of Tanks, which made its founder the country’s first billionaire.
In an interview, Vsevolod Yanchevsky , head of the Hi-Tech Park, said:
“The decree has been written exactly the way our tech community wanted it. Belarus will be one of the best jurisdictions in the world for cryptocurrencies and blockchain.”
Belarus’ move may have been influenced by its neighboring country Russia, who’s upcoming draft law on cryptocurrency and ICO regulations is set to come on December 28. The law will reportedly consider cryptocurrencies as “other property,” and introduce possible limits on individual ICO investments.
The bill, which will prioritize the protection of retail investors, is likely going to be passed in March 2018. Back in October, President Putin approved a timeline for a framework on cryptocurrency regulations. Reportedly, the country may also soon be launching its own state-sponsored cryptocurrency, the Cryptoruble.
Alexander Lukashenko image from Shutterstock.