Promised Crypto-Friendly Environment? Belarus Plans to Ban Cryptocurrency P2P Trading

Belarus announced on Sunday that it is planning to ban peer-to-peer (P2P) cryptocurrency trading, allowing trading only through local exchanges, causing concerns among local users about the government's stance on cryptocurrencies. Additionally, this move seems contradictory and confusing as Belarus has been offering various incentives to local cryptocurrency companies and introducing multiple bills supporting the free circulation of cryptocurrencies.

P2P Ban: Local Exchanges Only

According to Decrypt's report, the Belarusian Ministry of Internal Affairs announced on July 2nd that they are considering regulations to ban direct cryptocurrency exchanges or transactions between individuals to prevent P2P services from becoming channels for criminal organizations to launder illegal proceeds. In the future, trading will only be allowed through exchanges registered with the Belarus High-Tech Park (HTP).

A spokesperson for the Belarusian Ministry of Internal Affairs stated:

Since the beginning of this year, the cybercrime department has stopped 27 activities that provided illegal cryptocurrency exchange services, with total illegal profits exceeding $8.8 million. To enhance transparency and control, we will focus on legislative innovation and intend to prohibit cryptocurrency transactions between individuals.

He added that authorities plan to introduce practices similar to foreign currency exchange at permitted exchanges to prevent the withdrawal of funds obtained through illegitimate means. After strengthening supervision, cybercrime activities in Belarus will become unprofitable.

Crypto Enthusiasts Question Government's Enforcement Capabilities

Samson Mow, CEO of Jan3 and a Bitcoin advocate, stated through Cointelegraph that "banning P2P is not impossible, but it is not easy either." He cited China's strong ban on cryptocurrency circulation as an example, indicating that many users still trade and acquire cryptocurrencies through P2P channels.

What is HTP?

The Belarus High-Tech Park (HTP) was established in 2005 and transformed into HTP 2.0 in the Digital Economy Act of 2017, focusing on technologies such as blockchain, fintech, and engineering solutions to create an environment with low taxes and high capital mobility. It has been recognized by various international media as the "Silicon Valley of Eastern Europe" and the "World AI Development Center."

Contradictions with Previous Friendly Attitudes

Belarus's shift from its previous crypto-friendly stance to heavily restricting P2P actions has left cryptocurrency users confused.

Prior to this, legislation was passed before March 2018 to legalize all cryptocurrency-related activities, including ICOs and smart contract development. The Belarusian bank even launched its own cryptocurrency exchange in 2020, allowing Belarusian and Russian users to purchase Bitcoin using Visa cards. Additionally, in March of this year, the country offered incentives such as tax exemptions and visa-free entry to those involved in mining, blockchain creation, or cryptocurrency-related infrastructure and companies.

In April this year, Belarus was also named one of the top ten cryptocurrency tax-friendly countries by Glassnode.

The seemingly friendly policies are in stark contrast to the current P2P ban, especially considering that the local government had just passed a law last February supporting "the free circulation of cryptocurrencies."