Belarus announced on Sunday (2) that it is planning to ban peer-to-peer (P2P) cryptocurrency transactions, which will only be allowed through local exchanges, causing local users to worry whether the authorities are no longer friendly to cryptocurrencies. In addition, this move seems to contradict and confuse Belarus's continued efforts to offer a number of welfare measures to local crypto companies and pass a number of bills supporting the free circulation of cryptocurrencies.
P2P is prohibited, but local exchanges are allowed
According to Decrypt, the Belarusian Ministry of Internal Affairs announced on July 2 that in order to prevent P2P services from becoming a channel for criminal organizations to cash in illegal gains, it is drafting regulations to prohibit cryptocurrency exchanges or direct transactions between individuals. In the future, transactions will only be allowed through exchanges registered in the Belarusian High-Tech Park (HTP).
A spokesman for the Press Department of the Belarusian Ministry of Internal Affairs said:
Since the beginning of this year, the Cyber Crime Unit has stopped 27 illegal cryptocurrency exchange services. The total illegal profits exceeded $8.8 million. Therefore, in order to increase transparency and control, we will work on legislative innovation and intend to ban cryptocurrency transactions between individuals.
He added that the authorities are expected to introduce a practice similar to foreign currency exchange in licensed exchanges, making it impossible to withdraw funds obtained through improper means, and stressed that after strengthening supervision, cyber-technical criminal activities will become unprofitable in Belarus.
Crypto enthusiasts question government enforcement capabilities
Jan3 CEO Samson Mow, a Bitcoin advocate, told Cointelegraph that "banning P2P is not impossible, but it is not easy either." He cited China as an example, which had strongly banned the circulation of cryptocurrencies as early as 2021, indicating that many users still trade and obtain cryptocurrencies through P2P channels.
What is HTP?
The Belarusian High-Tech Park (HI Tech Park, HTP) was founded in 2005 and transformed into HTP 2.0 in the Digital Economy Act passed in 2017. It is committed to technologies such as blockchain, financial technology, and engineering solutions, creating a good environment with low taxes and high capital flow freedom. It has been rated as the "Silicon Valley of Eastern Europe" and "World AI Development Center" by many international media.
Contradictory to previous friendly attitude
Belarus has changed its previous crypto-friendly attitude and has taken drastic measures to restrict P2P, leaving crypto users at a loss.
Previously, the authorities had legislated all cryptocurrency-related activities (including ICOs and the construction of smart contracts) by March 2018. Belarus Bank launched its own cryptocurrency exchange in 2020, allowing Belarusian and Russian users to buy Bitcoin with Visa cards. At the same time, in March this year, the country also provided incentives including tax exemptions and visa exemptions to those who participated in mining, creating blockchain or crypto-related infrastructure and companies.
In April this year, Belarus was also ranked as one of the top ten cryptocurrency tax-friendly countries by Glassnode.
All these seemingly friendly policies are in sharp contradiction with the ban on P2P this time, especially since the local government just passed the "free circulation of cryptocurrency" bill in February last year.
So what do you think about this?