Decree #8, On the Development of Digital Economics, detailed review by WhatDaHack?!
On the 21st of December, 2017 such terms as cryptocurrencies, tokens, mining, smart contracts and crypto related activity were officially recognized and legally accepted by the government of Belarus. The news hit some major media but faded out too fast in the shadow and noise coming from the whole market buzz. My team who helps me to run WDH?! show and I deeply analyzed Decree #8 and were surprised to discover a wide range of new and unique opportunities now open both for local and global crypto community yet considered in most countries. Together with the rumors about Chinese ban and the recent official announcement from US Government, this Decree may, probably, affect the whole global cryptocurrency market very soon.
1. Cryptocurrency
Cryptocurrency is recognised as a means of exchange for other currencies, tokens or electronic money, but not as a universal means of payment and value exchange or a currency like fiat money. This definition is similar to Japanese approach meaning that a token can be a currency if it is recognized as such not only in the territory of the Republic of Belarus, but also in other countries.
Other words, people and companies in Belarus are allowed to buy and sell cryptocurrencies with fiat money or electronic money or even with another cryptocurrencies or tokens, but they are still not allowed to be paid for selling goods or providing services.
That rule does not apply to the residents of the Hi-Tech Park, which is a governmental agency that helps to develop and control IT-industry in the country. We gonna talk about HTP residents and their advantages a bit later.
So, as soon as Bitcoin or other cryptocurrency will be recognised as a widely used means of exchange, it should be automatically recognised in Belarus. When will this happen?! What country will officially announce Bitcoin as a currency?! These questions still remain open, but the first thing I want to underline that Bitcoin and other cryptocurrencies are not banned in Belarus, they are legally permitted but with temporary limitations.
2. Tokens
The Decree officially treats blockchain as informational system thus it treats token as the objects of property rights allowing a wide range of tokens nature from copyrights to digital assets.
Now civilians can possess tokens, perform mining, exchange tokens, buy and sell them for local and foreign currency, electronic money, as well as to present and pass tokens as heritage.
The current law heavily regulates and in many cases prohibits operations with foreign currencies, though this restrictions are not applied to operations with tokens and cryptocurrencies. Meaning that one can buy and sell tokens or cryptocurrencies with US dollars, euros or even with Mongolian Togrogs.
Legal entities now are authorized to possess tokens, create and list their own tokens, buy and exchange tokens but only through cryptocurrency exchanges and cryptocurrency exchange operators which must be HTP-residents. That’s a tremendous breakthrough opening doors for corporate sector to the world of blockchain.
Right now most of the money in the cryptocurrency market are the money of individuals, almost 500 billion in us dollars are money of general people.
3. Smart-contracts
We are getting closer to the most juicy parts. Smart-contracts, as a notion initially created by Vitalik Buterin, now officially defined at the legislative level by Belarusian Government. Due to the Decree a smart contract is a piece of a code functioning in a blockchain for the purpose of automated performance or execution of legal actions and agreements and (or) execution of transactions when such contract contains financial conditions.The Decree treats smart-contracts as general paper contracts giving them full legal power.
Here we saw also a very first attempt to bring some clarity and common rules to the ICO market. As the regulation presupposes that the buyer or seller of ICO to be considered aware of the smart-contract conditions until it is proved to be wrong.
Altogether such smart-contracts regulation may optimize many many processes where a human as a mediator can be extracted and providing a good platform for products utilising m2m or IoT technologies.
MiningMining of any token or cryptocurrency is officially legal for companies and individuals meaning any dude in Belarus can mine like a pig and get richer and richer. For individuals there is no need to register as a legal entity as mining is considered neither financial nor entrepreneurial activity in case no third parties involved into mining process. There is no need to pay taxes. No taxes on mining. The only obligation is bookkeeping on personal mining activity and profits. Such regulation rules may help to flourish mining activity among civilians therefore to develop supporting infrastructures for growing number of coins and projects. Bookkeeping obligation is intended to collect statistics officially now and, probably, to apply taxes in future. But in 2018 no taxes on mining.
Business or individual entrepreneurs registered as Hi-Tech Park residents are also allowed to mine and liable to pay only 1% from gross revenue. 1%.!!!
4. Initial Coin Offering (ICO)
Ta-da. The most hot topic of the recent months - ICO. Decree #8 does not consider tokens as a security. Did you hear that US Securities and Exchange Commission? Not a security. People and companies are liable to buy\sell tokens legally through an operator registered in Belarus and residing in Hi-Tech Park.
A legal entity issuing and listing its token through an HTP-resident is liable to meet certain requirements that will demand more responsibility from projects and team in front of their investors. There is no good and trusted statistics regarding ICO failures yet, but accounting reality, probably, 50% of the recent ICOs will never see teams delivering there promises.
5. Cryptocurrency exchanges
To work legally as a cryptocurrency exchange in Belarus a company must become an HTP-resident and hold at least $500,000 procuring in a local bank. Soon the paper will be supported with Anti Money Laundering and Know Your Customers procedure rules, which should be general rules already applied by other exchanges in other countries.
Resolution
The new law comes to force on March, 21st, 2018, very soon. that’s why there is still pretty much time for businesses and community to evaluate real benefits from registration in Belarusian jurisdiction and allocate potential risks. So far I can list a few possible risks and outcomes came to my mind:
- The character of the decree is too compromising for the staled local economy, so it may be a shock therapy for the market causing many mistakes and misunderstanding.
- The region has quite low investment reputation, so the investment rating will not recovery until the global community witness one-two success stories which may takes at least one-two years.
- Strong centralized authority may enter a conflict with decentralized concepts brought up by blockchain technology (ideologically and financially).
- Low trust to the authority from local community of crypto enthusiasts, business and citizens in general may keep the market idle or passive.
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There should be probably more potential risks and here we need your help. Write your ideas in the comments and most reasonable ones will be highlighted in the next videos.
Many questions still remain uncovered by the Decree and more concrete understandings of these provisions will appear only after acceptance of all necessary additional legal acts. We are certainly going to keep our head in the topic and cover any interesting news in future.
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