Belarus
Economic Situation in Belarus
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Belarus has a government-controlled economy, with the state owning key industries like manufacturing, energy, and agriculture. The country heavily relies on trade with Russia for financial support and cheaper energy sources.
Due to political unrest and subsequent Western sanctions, Belarus has become increasingly dependent on Russia, which has led to economic struggles stemming from limited access to Western capital and reduced trade opportunities.
Strict state control further hampers economic growth, and without reforms or improved relations with other countries, Belarus is likely to remain stagnant and reliant on Russia for support.
Belarus' economy grew by 5.5% in the second quarter of 2024, up from 4.3% in the first quarter. Key factors for this growth include increased investment, high consumer spending, and strong support from Russia.
Despite this rapid growth, unemployment is at a record low of 3.0%, leading to worker shortage. This prompted businesses to raise wages by over 22% since 2021.
In July 2024, consumer confidence in Belarus improved, with the Consumer Confidence Index reaching -1.4%, the highest since December 2021. However, inflation remained a concern at 6.1% in the second quarter, despite government efforts to control prices, especially for non-food items. The cost of services still continues to rise.
Belarus' economy is expected to grow by around 4% in 2024, but growth may slow to 0.5% to 1.5% in 2025 due to higher interest rates limiting borrowing and spending.
Inflation is projected to rise to 5% to 7% in 2024 and could reach 6% to 9% in 2025 due to increasing costs in Russia and the effects of sanction
Current State of Crypto Adoption in Belarus
Source: Freepik
Despite the political unrest, subsequent Western sanctions, and an increasing dependency on Russia, cryptocurrency is thriving in Belarus. The country became the first in Eastern Europe to adopt comprehensive legislation governing cryptocurrencies.
Since the government passed Decree No. 8 in 2017, digital currencies have been legal, and businesses operating in the Hi-Tech Park have enjoyed special tax benefits. This decree legalizes businesses based on blockchain technology.
The Belarusian government has created a legal framework that encourages cryptocurrency businesses. Companies in the Hi-Tech Park pay only 1% of their income in taxes until 2049.
The Hi-Tech Park (HTP) in Belarus serves as a major hub for IT companies, professionals, and startups. The park benefits from special laws that allow businesses working with digital currencies to operate tax-free.
HTP also incorporates certain aspects of English law in business matters, making it an attractive destination for foreign investors. As a result, HTP is becoming a center for blockchain projects, which are used to record and store data securely. This development will help Belarus grow as a leader in innovation in digital finance and IT.
Some companies in Belarus now accept cryptocurrency as a form of payment, particularly in the tech and online service sectors. Freelancers and IT professionals utilize cryptocurrency for cross-border payments to avoid high banking fees.
While crypto exchanges and Initial Coin Offerings (ICOs) are allowed, they must comply with specific legal and financial requirements. The National Bank oversees crypto-to-fiat exchanges to ensure adherence to financial regulations
“Belarus will become the first government in the world that opens wide opportunities for the use of blockchain technology”
This statement was made on the official website of President Alexander Lukashenko, who signed the new land law and believes that his country “has every chance of becoming a regional center in this area.”
Cryptocurrency Law in Belarus
Source: Freepik
Belarus has legalized cryptocurrency. In December 2017, the government introduced Decree No. 8, titled “On the Development of the Digital Economy.” This was the country's first official law governing cryptocurrency and blockchain.
The law came into effect on March 28, 2018. Later, in November 2018, the Supervisory Council of the Hi-Tech Park established additional rules to manage token-related activities.
Under this decree, individuals are permitted to sell, trade, and mine cryptocurrency. However, if someone wishes to convert cryptocurrency into regular currency, they must obtain approval from the National Bank.
Crypto exchange operators are categorized as high-risk entities, similar to lottery and casino businesses under Belarusian law. Decree No. 8 also grants businesses the right to issue and use tokens for fundraising purposes. Individuals can mine cryptocurrency, buy tokens, trade, sell, gift, or inherit digital currency.
Companies operating within the Hi-Tech Park (HTP) enjoy special tax benefits. They are exempt from regular taxes and only pay 1% of their total income. These benefits are guaranteed to continue until 2049.
Crypto platforms must adhere to specific financial and legal requirements to operate. Companies interested in launching an Initial Coin Offering (ICO) in the Hi-Tech Park must undergo an application process to obtain approval.
Factors Driving Crypto Adoption in Belarus
Source: Freepik
Several factors are helping more people and businesses use digital currencies. Here are the main reasons behind crypto adoption in Belarus:
Government Support
The Belarusian government has created friendly policies for cryptocurrency. In 2017, it passed a law making crypto legal and tax-free for businesses in the Hi-Tech Park, encouraging growth in the sector.
Economic Factors
Belarus has faced economic challenges, including inflation and banking restrictions. Cryptocurrency offers an alternative way to save, invest, and transfer money without relying on traditional banks.
Financial Inclusion
Crypto provides an option for those who want to make transactions and store money digitally without needing a bank account.
Ease of Cross-Border Transactions
Cryptocurrency makes international trade and payments simpler. Businesses and freelancers in Belarus can receive payments from clients in other countries without worrying about exchange rates and bank fees.
Challenges to Cryptocurrency Adoption in Belarus
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Cryptocurrency is legal in Belarus, and the government has created rules to support its use. However, many challenges still make it hard for people and businesses to fully adopt crypto. Here are some of the main obstacles
Strict Government Regulations
While Belarus has legalized crypto transactions, the government imposes strict rules on its use. Only approved platforms such as BYNEX that operate under the regulations set by the High Technologies Park (HTP) can handle crypto exchange, limiting users' freedom to trade. This heavy regulation discourages some businesses and investors
Other international crypto exchange platform that are accessible to Belarusian users are Upay, Kraken and OKX.
Banking Restrictions
Banks in Belarus do not support crypto transactions. Users cannot connect their bank accounts to crypto exchanges, making it hard to buy or sell digital assets. Without banking support, crypto remains less accessible.
Security Risks
Like in many other countries, crypto users in Belarus face risks such as hacking, fraud, and scams. Many people fear losing their money due to weak security protections, and victims of crypto-related crimes often have little legal help.
Dependence on Russia’s Economy
Belarus relies heavily on Russia for economic stability. If Russia changes its stance on digital currencies or introduces restrictions, Belarus may have to follow, causing uncertainty for crypto users.
Uncertain Future Policies
While the government currently supports crypto, future policies may change. New restrictions or higher taxes could make it harder for businesses to operate in the crypto space, limiting its growth.
Potential Benefits of Cryptocurrency Adoption in Belarus
Source: Freepik
Cryptocurrency is gaining attention worldwide, and Belarus has taken steps to embrace it. If widely adopted, crypto could bring several benefits to the country. Here are some key advantages:
Boosting the Economy
Crypto can attract new investments and create more business opportunities. Startups and tech companies can grow by developing blockchain-based solutions, helping the economy expand.
Lower Transaction Costs
Traditional banking and money transfers often have high fees. Crypto transactions usually cost less, saving money for businesses and individuals.
Encouraging Technological Growth
Adopting cryptocurrency can push Belarus to develop more advanced digital technologies. This can help the country become a leader in blockchain and financial innovation.
Reduced Dependence on Traditional Banking
With crypto, people and businesses do not have to rely only on banks. This can be useful in times of economic crisis or banking restrictions.
Attracting Foreign Investors
If Belarus creates a crypto-friendly environment, it could attract foreign investors and blockchain businesses. This can lead to job creation and innovation in the country.
Current Crypto Usage in Various Sector in Belarus
Source: Freepik
Cryptocurrency is legalized and becoming more popular in Belarus. Several sectors are using crypto in different ways. Here are some key areas where cryptocurrency is being used:
Technology and Startups
Many tech companies and startups such as Aratag, Artezio, Enkode Technologies, ChainArtSoft and many more in Belarus are working with blockchain technology. They use crypto for payments, fundraising, and developing new digital solutions.
E-Commerce and Retail
A few online stores and businesses such as Bitrefill accept cryptocurrency as payment. Although it is not widespread, more businesses are considering it as an option to attract international customers.
Freelancing and Remote Work
Freelancers and remote workers in Belarus use crypto to receive payments from clients worldwide. This is a faster and cheaper alternative to traditional bank transfers.
Real Estate
Some property developers and agencies in Belarus allow payments in cryptocurrency. This makes it easier for foreign buyers to invest in Belarusian real estate without dealing with traditional banking restrictions.
Education and Research
Universities and research institutions in Belarus are studying blockchain and cryptocurrency. Some programs teach students about crypto technology and its applications in business and finance.
Conclusion
As Cryptocurrency is becoming increasingly popular in the world, Belarus is not left out, the government has legalized it and offers tax benefits to attract businesses. The Hi-Tech Park is helping the country develop as a hub for blockchain projects and digital finance.
However, challenges like unclear regulations, limited banking support, and low public awareness slows adoption. While some businesses and freelancers use crypto, most people still favor traditional banking.
Despite these challenges, growing interest in cryptocurrency suggests that with continued government support and increased public awareness, Belarus has the potential to lead in cryptocurrency and blockchain innovation.
