With this move Belarus aims to further consolidate its booming IT sector and attract more foreign investors by allowing ICOs which are increasingly being frowned by regulators in other countries.
In yet another instance of a cryptocurrency gaining legal foothold in the financial work, in efforts aimed at attracting foreign investment and boosting the growth of its private sector, Belarus has legalized transactions in cryptocurrencies.
On Thursday, President Alexander Lukashenko signed a decree on such a move.
“All smart and intelligent people know what stability and order are,” state news agency BelTA quoted Lukashenko as saying earlier this month. “They’re all trying to reach that shore. We’re prepared to arrange a dock and even a harbor.”
Geographically located between Russia and the European Union, the former Soviet republic is still under Russia’s shadow with its state owned enterprise weighed down by inefficiencies and bureaucracy. It also depends on Russia for its funds and subsidies.
Following the recession of 2015 and 2016, Lukashenko, who once called the internet “garbage”, has embraced reforms to improve the country’s business climate and shore up its economy. As a result, the country has developped a few globally recognized IT brands.
The latest decree is aimed at attract digital coin entrepreneurs, who are moving their businesses to locations more amenable to cryptocurrencies.
“The decree is a breakthrough for Belarus,” said Anton Myakishev, head of Microsoft at Belarus.
“It gives the industry the possibility to make a leap forward in its development and allows foreign capital the possibility to come to Belarus and work in comfortable conditions.”
The decree legalizes initial coin offerings (ICO) and transactions in cryptocurrencies, including their exchange for traditional currencies on Belarussian exchanges, while all trades will be tax-free for the next five years.
The decree also allows local IT companies to operate in part under English law, a huge boon to foreign investors who typically struggle to navigate the Belarussian legal system.
“We regularly faced legal problems. When a Western company buys a Belarussian company they try to structure the deal outside Belarus,” said Denis Aleinikov, senior partner in a private law firm Aleinikov and Partners in Minsk and the main author of the decree. “Investors don’t want to deal with Belarussian legislation”.
As a result of Belarus, its IT sector has flourished and has attracted foreign workers while its other industries are facing a slump. Its IT industry pays five time the average wage in comparison to other sectors.
However, its economy is expected to return to growth and is expected to grow at 1.7% in 2017. In November, the International Monetary Fund (IMF) said its economy is set to grow at 2% annually over the next few years if state-run heavy industries don’t modernize.