Belarus has just taken a decisive step in the field of cryptocurrencies by officially establishing a legal framework for “cryptobanks.” Signed by President Alexander Lukashenko, Decree No. 19 specifies the conditions for the licensing and supervision of these new financial institutions, which are capable of combining traditional banking operations with cryptocurrency-related activities.
What is a Belarusian cryptobank?
This weekend, Belarus officially established a legal framework for “cryptobanks.” On January 16, Belarusian President Alexander Lukashenko signed Decree No. 19 regarding “cryptobanks and certain issues related to oversight in the field of [cryptocurrencies].”
According to the press release, “this document aims to strengthen Belarus’s image as a leading country in the field of financial technology and provides for the creation of favorable conditions for the operation of cryptobanks within the country.”
As described, a cryptobank is defined as “a company […] granted the right to combine activities involving the use of […] [cryptocurrencies] with the conduct of banking, payment, and other related financial operations.”
To be admitted to the market, a cryptobank must first be licensed within the High-Tech Park (HTP), a special economic zone under direct state supervision.
The company must also be formally registered with the National Bank of the Republic of Belarus by being entered into the official register of cryptobanks. This step allows the central bank to control market access and fulfill its responsibilities related to internal security (money laundering and terrorism in general).
Furthermore, the cryptobank will be subject to two sets of complementary rules. On the one hand, it must comply with the legislation applicable to non-bank credit and financial organizations. In other words, standards similar to those of the traditional financial system.
On the other hand, it must also comply with the decisions of the High-Tech Park Supervisory Board. This council plays a specific supervisory role regarding technology and innovation.
The objective is to enable these entities to “offer their clients innovative financial products that combine both the advantages of traditional banking and the technical sophistication, speed, and convenience of transactions using [cryptocurrencies].”
A history fraught with paradoxes
As a former Soviet republic, Belarus maintains very strong ties with Russia. As a result, Minsk, like Moscow, is subject to Western sanctions.
In this context, President Alexander Lukashenko sees cryptocurrencies as a way out. In early September, addressing commercial banks and the central bank, he urged them to promote the adoption of cryptocurrencies.
Like Russia, Belarus has maintained a rather ambiguous relationship with cryptocurrencies for several years. In April 2019, the president proposed using surplus energy from the country’s first nuclear power plant to mine Bitcoin. This proposal was reiterated in February 2021 by the Ministry of Energy.
Then, in July 2023, the Ministry of the Interior announced a ban on peer-to-peer cryptocurrency exchanges in order to better control illegal flows.
As we have just seen, a more pragmatic and nuanced approach is ultimately being favored. As shown in the interview with Evgeny Macharov, a member of the Public Chamber of the Russian Federation, regulation may present itself as a solution.
Furthermore, by legalizing transactions that were previously clandestine, the state ensures the collection of mandatory taxes on these operations, while equipping itself with tools to verify their legitimacy and compliance.
