Belarus is drafting legislation that will outlaw crypto transfers between individuals, known as peer-to-peer (P2P) transactions, in a bid to crack down on criminal operations in the nation.
On Sunday, the Ministry of Internal Affairs of Belarus announced the ambitious plans on social media. “Since the beginning of the year, employees of the cybercrime counteraction units have stopped the activities of 27 citizens providing illegal services for the exchange of cryptocurrencies,” the ministry posted on Russian social platform VKontakte.
“Their total illegal income amounted to almost 22 million rubles” — equivalent to $8 million at press time.
According to the ministry, the legislation will “make it impossible to withdraw money obtained by criminal means” and therefore will make it unprofitable for these fraudsters to operate in Belarus.
However, P2P transactions will still be allowed through crypto exchanges registered with Belarus Hi-Tech Park (HTP) — a tax regime in Belarus that aims to develop tech business.
Belarus used to be at forefront of crypto adoption
The move comes after years of pro-crypto measures. Belarus legalized cryptocurrencies, ICOs, and smart contracts in 2018 as long as companies were part of the HTP. “Belarus will become the first government in the world that opens wide opportunities for the use of blockchain technology,” President Alexander Lukashenko said that year.
HTP-registered business enjoyed zero tax and no restrictions until 2023 — allowing firms to mine, create, and acquire crypto tokens without declaration. In 2021, Lukashenko called on the government to mine crypto with spare power.
And in February last year, Lukashenko signed a decree to support the free circulation of crypto. It intended to protect crypto investors from losses and provided a legal basis for HTP to register addresses associated with criminal activity.
However, this draft legislation would place a significant limitation on crypto trade. What’s more, many question the enforcement of banning P2P transactions.
China, for example, is having a tough time upholding the same ban put in place back in 2021. And banning P2P transactions goes against Bitcoin’s original use case outlined by Satoshi Nakamoto.
It remains to be seen how the Ministry of Internal Affairs plans to effectively enforce such a ban — or if it will even become law.