Nowadays, the topic about cryptocurrency, mining and blockchain is a main agenda for a lot of Hi-Tech web-sites. During the time we have seen the birth of new directions in the digital economy such as a mining, cryptocurrency exchange, creating altcoins, ICO and startups based on the blockchain technology. However, the process of state regulation of this activity is not yet clear. In some countries the public authorities have not decided yet how they will regulate cryptocurrency market that's why entrepreneurs work at their own risk.
Decree No.8 dated December 21, 2017 "On Digital Economy Development" seems to be a positive example of cryptocurrency market's state regulation in the Republic of Belarus. The IT community from other countries drew the attention to this state document, which expands the powers of the Belarusian High-Tech Park (HTP) in this area. For example, the Russian Federation's public authorities have not decided yet how to regulate cryptocurrency market, there are various legislative initiatives - from a complete ban cryptocurrencies to recognition its.
Judging by social media's reaction on the Decree No. 8, the foreign IT entrepreneurs and investors have an interest to creating a new cryptocurrency companies in the Belorussian HTP, but they have some questions. Can a foreign company (non-resident of the Republic of Belarus) become a resident of the Hi-Tech Park? How can you create own cryptocurrency business according by Decree No. 8? We will try to answer on the questions by accordance with Belarusian legislative.
1) According to legal entities and individual entrepreneurs of the Republic of Belarus (i.e. residents of the Republic of Belarus) may be registered as residents of the Hi-Tech Park. If a foreign company wants to perform its activity in the Hi-Tech Park, it can establish a legal entity in the Republic of Belarus according to the procedure stipulated by . This established legal entity may apply for HTP residency in compliance with all the requirements of the Regulations on the Hi-Tech Park. Can a legal entity become a resident of the Hi-Tech Park if it is registered (has its legal address) outside of the Hi-Tech Park or even outside of Minsk in Belarus? Yes, it can. Clause 1 of the Decree clearly says that the principle of exterritoriality is preserved.
2) On the next step, you have to become an HTP resident. To become a resident, a legal entity or an individual entrepreneur of the Republic of Belarus must submit to the Hi-Tech Park Administration the following documents:
a) Application for registration of a set form:
Copies of the statute (article of incorporation – for a commercial organization which operates only on the basis of article of incorporation) and the certificate of state registration of the legal entity certified by its head, copy of the certificate of state registration of the individual entrepreneur. The originals of the mentioned documents also have to be presented;
b) Business project meant for implementation as the resident of the Hi-Tech Park.
3) How to write a business project. Your business plan has to contain one or several activities listed in Clause 3 of the Regulations on the Hi-Tech Park, specific arrangements for their implementation, types and volumes of goods (works, services), property rights, which are to be realized, grounding of the necessity of their realization, planned results of financial and economic activity. Currently,
4) On the following stage, your business-project is a subject to scientific and technical expertise and has to be considered by the Supervisory Council. In case the Supervisory Council takes a positive decision, a legal entity or an individual entrepreneur becomes the resident of the Hi-Tech Park.
The steps to open a company-resident HTP have been completed. This algorithm worked also earlier for traditional activities of the High-Tech Park (for example, software development).
What should you do, if your activity is a mining, cryptocurrency exchange or issuing new cryptocurrency by accordance Decree No.8?
We will indicate the main findings and explain some clause of the Decree:
- The Decree comes into force on March 28, 2018. It means that before March 28, 2018 mining and cryptocurrency activity in Belarus is outside the legal environment (it is not regulated by the legislation).
- According to Decree No.8, a legal entity may perform mining activity and other cryptocurrency activity only after it has become a resident of the Hi-Tech Park.
- Decree No.8 determines the right of physical bodies to perform mining activity.
Relevant by-laws appear gradually and explain some Decree's clauses. For example, how will the cryptocurrency activities be regulated in Belarus?
Let's see what clarifications on these issues were prepared for entrepreneurs by the National Bank of the Republic of Belarus in February 2018:
- The Belarusian Ruble (BYN) is the main currency on the territory of the Republic of Belarus, using of tokens is limited, foreign exchange transactions between residents of the Republic of Belarus are forbidden, all payments are made in Belarusian Ruble (BYN) only.
- Cryptocurrency transactions will be defined as a "high-risk" transactions in Belarus and banks will consider to cryptocurrency trading platforms as legal entities with high-risk level.
- Banks have to monitoring and verification of such customers and improve its information security policy (for example, anti-fraud activities).
Let's try to analyze: why did the regulator take such measures?
By cybersecurity's analysts opinion, some cryptocurrencies (for example, Monero XMR) are used as the main means for payments in DarkNet. Over the past few years, the crimes in the Internet are not the destiny of single hackers, the multinational cybercrime business works in DarkNet. That "well-established business practice" includes the development of malicious software, "specific marketing" and money-laundering. Cryptocurrency's transactions provide the high anonymity for users, as a rule users want to withdraw Bitcoins (altcoins) and they use cryptocurrency exchange for this goals. Also, cryptocurrency exchanges have the vulnerabilities which may be implemented in cybersecurity threats, for example a "scam" (it means that cryptocurrency trading platform doesn't pay money). To avoid cryptocurrency exchange's scam IT-entrepreneurs and banks need to provide risk assessment periodically.
On the other hand, the blockchain eliminates the "third party" in the deals (for example, financial, state or legal institutions). That's why the modern customers choose it for direct payments between entities outside the banking sector. IT-entrepreneurs, banks and public authorities will solve this sophisticated problems together.
In this article, we have outlined the main steps needed to organize a cryptobusiness in the Hi-Tech Park within the framework of Decree No. 8. How to create own cryptocurrency trading platform or issuing new altcoins, we will describe in our following articles.
Russian version: Белорусский ПВТ: регулирование оборота криптовалют и развитие криптобизнеса.
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