In December, 2017 the government of Belarus adopted the law on cryptocurrency that granted smart contracts the legal status. Decree № 8 «On the Development of the Digital Economy» is aimed to regulate the blockchain technology and cryptocurrency sphere of the country.
What is the essence of this new law?
The activity of cryptocurrency exchanges, exchangers and other structures that use the blockchain technologies and digital assets are now legalized. All operations of legal entities and individuals will be conducted according to the established rules. Thus, from now on cryptocurrencies and tokens in Belarus can be:
- bought and sold for fiat and digital assets;
Any cryptocurrency comes out of the shadows becoming a part of the state economy. The specific rules are also established for the initial placement of tokens (Initial Coin Offering, or ICO): legal entities are now allowed to create their digital assets, place them and perform any operations through exchanges or exchangers.
It became possible to withdraw tokens in foreign countries, but only with the help of the HTP (High-Tech Park) residents. Using the companies of this organization you can legally withdraw fiat funds to accounts opened in the other countries of the world. Working with resources that are HTP residents is also much safer due to the high level of control.
What is the High-Tech Park?
HTP was created as an analogue of Silicon Valley. This is an economic zone with specially developed legal and tax conditions pursuing a goal of the IT industry development. The High-Tech Park also has an extraterritoriality system.
The validity period of the HTP legal status was set until 2049. All residents are allowed to carry out the following activities in the field of information and communication technologies: education, sports (eSports), activity related to the artificial intelligence and so on.
Here are the main conditions for operations that are executed through the HTP residents:
- The objects registered in HTP, both individuals and legal entities are exempt from all taxes, except for the individual income tax with a fixed rate of 9%, but excluding the total annual income. Residents and employees of this organization have the right to pay compulsory insurance premiums in a reduced amount.
- Legal entities also have the right to create and place their own tokens, to carry out operations through exchanges and exchange operators.
- Individuals are allowed to be engaged in mining, own tokens, acquire and dispose of them for Belarusian rubles, foreign currency and electronic money. Since it is not equivalent to business activities there is no need to declare income from transactions with tokens.
- Until January 1, 2023 revenue and profit from transactions with tokens are excluded from the taxable base.
Such factors favor the formation of new exchanges and companies. Traders will be able to invest into web platforms with transparent conditions of operation to gain greater profits.
Requirements for companies under this Decree
When the above-mentioned law entered into force the special rules were developed and adopted for companies that operate in the cryptoindustry. Organizations that intend to be engaged in transactions with digital assets will be inspected by the HTP. They must comply with the FATF standards (Intergovernmental Group for the Development of Financial Measures to Fight MonBelarusian rubles (~ $ 923,000 or € 813,000 at the rate of the National Bank of Belarus). For ICO organizers the start-up capital must be at least 500 000 Belarusian rubles.
- Statutory fund of at least 2 million Belarusian rubles (~ $ 923,000 or € 813,000 at the rate of the National Bank of Belarus). For ICO organizers the start-up capital must be at least 500 000 Belarusian rubles.
- Crypto platforms can organize trades, provide services for making transactions with tokens and cryptocurrencies.
- The rules for ICO include the audit of smart contracts, compliance with the terms of the concluded contracts, services for the creation and placement of tokens, etc.
This decree also establishes the requirements for the personal data protection. Storage and processing of such information should be performed in accordance with the world regulation standards of GDPR and MiFIDII.
What advantages will traders get?
All companies dealing with digital assets are required to disclose any information that affect security. It is required to warn about risks as well as to implement an internal control system. For investors and traders this means:
- avoidance of suspicious and dangerous operations;
- legalization of fiat funds withdrawal through banking structures;
- fraud schemes suppression.
All exchange operations of cryptocurrency for fiat money will be reviewed by the National Bank of the Republic of Belarus. Withdrawal of funds is going to be legal, so it will be possible to operate with large amounts without any risk.