Belarus Focuses on Cryptocurrency to Boost Its Tech Industry

The Belarusian government utilized Bitcoin’s increasing popularity as a tool to grow its technology industry. 

ZDNet gathered quotes from individuals who have been working closely with President Alexander Lukashenko in creating tech-friendly laws. Among them was Attorney Dennis Aleinikov who assisted the government in drafting a bill that would make foreign firms to obtain tax benefits in the country.

He told the news outlet that President Lukashenko wanted to develop Belarus as an international tech hub, but their economy did not have a budget to conduct a viral campaign.

The entrepreneurs close to the Belarusian President proposed using Bitcoin and its popularity to promote the nation’s technology sector. During the peak of the crypto boom in December 2017, a decree granting foreign tech firms unlimited access to the country’s tax-free climate was signed by President Lukashenko. It enforced 36 kinds of tax-exempt activities for these companies.

Belarusian high-tech park press secretary Dmitry Titov said: “Until 2049, there’s zero percent VAT, zero percent corporate profit tax, customs duty, offshore duty, income tax for foreign entities, tax on sales of shares of high-tech park residents, and zero tax on revenues of foreign companies.”

Moreover, the ICO sector has obtained legal status in the region, allowing them to facilitate crypto trading, issue tokens, and run mining enterprises under a tax-free structure that would expire in 2023.

“Cutting-edge technology [is a] very nice marketing instrument for a little country,” Aleinikov noted. “We decided that it would be good for Belarus to be the first country to make smart contracts legal.”

International regulators have serious concerns regarding how the ICO sector operates. At ideation stages, cryptocurrency startups would raise several million dollars through tokenized public funding. However, most of them end up failing to deliver a working project. Therefore, more than 85% of ICO projects failed, and investors suffered massive losses.

Despite its good intentions, Belarus may unknowingly enable shady firms to operate smoothly. The Belarusian authorities recently gave crypto-enabled real estate startup Relex Development an operational license. The company was facing insider trading allegations.

“Their CMO was caught in manipulating the community which allowed him to accumulate ~4% of the total supply of RLX. When confronted, the team deflected and pushed this situation off to the side. Months went by and as more investigating was done, more light was brought to the table by seeing the damage the CMO did by using alt accounts on Telegram. The issue was brought up again and at the beginning of December, the CMO ‘stepped down,’” a Redditor alleged.

Some bad instances do not necessarily make the country a hotbed for poor projects. Belarus recently approved tokenized securities exchange Currency.com, which secured $8 million investment from VP Capital and Larnabel Ventures.

In addition, blockchain solutions firms such as Smartym Pro and Intellectsoft are serving as third-party developers for various crypto projects worldwide. Independent and popular blockchain projects like Scorum, CopPay, OpenLedger, DEX, and DEIP hail from the Belarusian hi-tech park as well.

Thanks to its friendly regulations, the park has also attracted firms from other sectors like telecommunications, information security, robotics, space, and machine learning. Last year, more than 260 companies entered Belarus, resulting in a spike in software exports.