Cryptocurrency Regulation in Belarus – Fin Tech

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Not so long ago, our associate Gleb Yakushev took part in the seminar for small and medium-sized enterprises, which was organized within the framework of the United Nations global contract project. During the seminar, he talked about the existing regulation of crypto activity in Belarus and answered questions from participants.

Here are some key points from his speech.

Is it allowed to use digital signs (tokens) as a means of payment in the Republic of Belarus?

No, the use of digital signs (tokens) as a means of payment in the Republic of Belarus is not allowed.

On the territory of Belarus, the legal means of payment is the Belarusian ruble, in some cases it is allowed to use foreign currency. (Part 1, paragraph 1, article 141 of the Civil Code)

The Civil Code and other acts of civil legislation, the Law on Currency Regulation and Control and other acts of monetary legislation, acts of the National Bank, Decree No. 8 do not contain any provisions concerning cases where the use of digital signs (tokens) as a means of payment is allowed in the Republic of Belarus.

In view of the absence of any reference in the civil, monetary and banking legislation to the possibilities of using digital signs (tokens) in the territory of the Republic of Belarus, the use of digital signs (tokens) as a means of payment (eg, for the purpose of payment for goods, works, services) will be illegal under applicable law.

That is to say, at present, digital signs (tokens) are essentially more of an investment instrument (fe, acquisition for the purpose of holding until the required level of the value of the digital asset is reached, or acquisition for the purpose of trading).

What operations with digital signs (tokens) are allowed to perform for natural and legal persons in the Republic of Belarus.

The lists of operations that natural and legal persons are authorized to carry out appear in Article 2 of Decree No. 8.

Physical persons

Natural persons have the right to possess digital signs (tokens) and, subject to the specifics set out in Decree No. 8, to carry out the following operations, such as:

  • mining;

  • storage of digital signs (tokens) in virtual wallets;

  • exchange of digital signs (tokens) for other digital signs (tokens);

  • acquisition of digital signs (tokens), their alienation for Belarusian rubles, foreign currency, electronic money;

  • donation and bequest of digital signs (tokens) (Part 1, paragraph 2.2, clause 2 of Decree No. 8).

Note: The activities of mining, acquiring and disposing of tokens, carried out by individuals independently without engaging other individuals under employment and/or civil law contracts, are not activities entrepreneurial.

The list of operations mentioned above is full and complete, and therefore, in our opinion, the conduct of any other operation by individuals in relation to digital signs (tokens)
on the territory of the Republic of Belarus will be illegal under the applicable laws.

At the same time, Decree No. 8 and other legislative acts of the Republic of Belarus do not provide for any legal restrictions, which would prevent carrying out other operations
outside the Republic of Belarus in accordance with any foreign legislation (for example, the use of digital signs (tokens) as a means of payment), for individuals.

Important: It should be clarified that on 03.21.2021 changes were made to Decree No. 8. The powers of the administration of Belarus Hi-Tech Park (HTP) to control the activities of residents of HTP performing operations with signs (tokens), as well as because the list of authorized operations with numerical signs (tokens) has been clarified.

It is explicitly established that it is illegal and prohibited to carry out entrepreneurial activities of natural persons (individuals), as well as non-resident legal entities of the HTP, carrying out the relevant activities on:

  1. to provide assistance to other persons on the territory of the Republic of Belarus and (or) to use the information networks, systems and resources of the Belarusian national segment of the Internet to carry out and (or) carry out transactions (operations ) with digital signs (tokens) (including acting as a party to such transactions (operations) using the information system operating on the Internet or granting rights (permission) to other persons to use this information system);

  2. the acquisition and (or) alienation, including the exchange, of digital signs (tokens), except as otherwise provided in paragraphs 2.1 and 2.2 of paragraph 2 of Decree No. 8.

A comprehensive interpretation of the legislation of the Republic of Belarus makes it possible to conclude that individuals have the right to conduct transactions regarding digital signs (tokens) only for their personal needs. Activities of individuals aimed at acquiring/alienating/exchanging digital signs (tokens), during which they appear to “stand in for” cryptocurrency or cryptocurrency exchange operators (i.e. helping to perform and/ or carrying out transactions (operations) with digital signs (tokens) to other people) are illegal and prohibited.

Legal entities

Legal persons have the right to own digital signs (tokens) and, subject to the specifics established by Decree No. 8, to carry out the following operations:

  1. create and place their own digital signs (tokens) in the Republic of Belarus and abroad through HTP residents engaged in the relevant type of activity;

  2. keep digital signs (tokens) in virtual wallets

  3. to acquire, alienate digital signs (tokens), as well as carry out other transactions (operations) through HTP residents who perform the function of operators of cryptographic platforms (“cryptoexchanges”) and operators of exchange of cryptocurrencies (“cryptoexchangers”) (part 1 paragraph 2.1 of paragraph 2 of Decree No. 8).

This list of operations is also full and complete.

The main thesis with regard to transactions carried out by legal persons is that all transactions with tokens (purchase, sale, exchange, etc.), except for storage, must be carried out exclusively through residents HTP, whose business plan indicates the corresponding type of “crypto-activity”. ” (e.g. crypto exchange).

What are the main types of crypto-business regulated in the Republic of Belarus?

The main regulated crypto-companies are:

  • cryptoplatform operator (“cryptoexchange”),

  • cryptocurrency exchange operator (“cryptocurrency exchanger”),

  • Organizer of ICO (this type of activity covers cases where a company provides asset “digitization” services to third parties (whether resident or non-resident)) and mining.

Pursuant to Decree No. 8, a number of decisions of the Supervisory Board of HTP were subsequently adopted, which specified the requirements and conditions applicable to companies carrying out the above-mentioned types of activities.

The main requirement for crypto companies in Belarus is that all of these companies must reside in the Belarusian high-tech park and meet the established requirements.

What are the opportunities and restrictions for mining in Belarus?

Mining is a separate type of activity, which residents of the HTP are permitted to engage in (Paragraph 31, Clause 3 of the HTP Regulations). Thus, legal entities (companies) of the Republic of Belarus have the right to engage in mining activities only after obtaining the status of HTP resident. At the same time, obtaining a special permit (license) for mining is not required, since mining activities are not covered by the activities permitted according to Decree No. 450.

The procedure for obtaining HTP resident status is subject to the HTP Regulations. Unlike other types of activities, related to the circulation of digital signs (tokens) (for example, the activities of a crypto-platform operator), the acts of the HTP Supervisory Board do not provide for special requirements for applicants who intend to engage in mining activities.

In order to obtain the status of HTP resident, a legal entity must submit to the HTP administration, among other things, an application and a business project that it proposes to implement as an HTP resident, and prepared according to the form established by the resolution of the Cabinet of Ministers of March 27, 2006 N 403 (paragraph 3, clause 4 of the HTP Regulations).

The decision to grant HTP resident status to a business entity is taken by the HTP Supervisory Board and only if the
materiality and significance criteria the state of realization of his business project are established (article 7 of the HTP regulation). In addition to the Resolution of the Cabinet of Ministers of 03.27.2006 No. 403, when preparing a business project, applicants should also follow the methodological recommendations on the preparation of documents to be submitted for registration as than resident HTP, which are placed on the official website HTP.

Since mining is a specific type of activity and differs from the “classic” business models of IT companies (tailor-made, product software development), the business project of a legal person intending to carry out mining activities in the HTP will have its own peculiarities.

For the purpose of justifying the criterion of importance and importance of the applicant for the state of the implementation of his business project, it is recommended that applicants, according to the opinion of the authors, state in the project company, among others, the following points:

  • digital signs (tokens) intended for mining;

  • a detailed technical description of the equipment to be used for mining (manufacturer, sources of supply);

  • indication of the software to be used for mining;

  • description of electrical energy sources;

  • calculation of the annual cost of electricity in the planning horizon;

  • calculation of the volume of digital signs (tokens) with indication of their type, which the applicant plans to mine each year within the planning horizon;

  • sources of funding for the applicant’s activities at the initial stage of development.

It should be noted that the HTP resident has the right to alienate the digital signs (tokens) mined as a result of mining only through HTP residents, who perform the activities of crypto exchange operators -platform and cryptocurrency.

There are no restrictions on mining for individuals.

In addition, the state provides the following benefits:

  1. Digital signs (tokens) are not subject to declaration (part 2 paragraph 2.2 of article 2 of decree no. 8)

  2. Until January 1, 2023, the income of natural persons from mining and the alienation of digital signs (tokens) are not considered as items subject to income tax (paragraph 3 part 1 paragraph 3.1 clause 3 of Decree No. 8).

We can advise you on all questions of taxation and organization of crypto-business in Belarus.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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