Citing high cybercrime rate, Belarus planning ban on P2P crypto exchanges

Belarus has officially started working on legal amendments that would ban permissionless transactions involving cryptocurrencies like Bitcoin, according to reports. The move is believed to be guided by the Belarusian government’s concern over the rising cybercrime in the Eastern European country. 

In a July 2 announcement on the encrypted messaging platform Telegram, Belarus’ Ministry of Foreign Affairs stated that it was working on new legislation that would prohibit its nationals from using P2P cryptocurrency exchanges.

Citing the high rate of cybercrime in the country, the ministry stated that crypto services were highly demanded by “fraudsters” who allegedly “cashed out and converted stolen funds” and then transferred them to other participants in their “criminal schemes”. 

The ban is being implemented to weed out such illegal activities, the Belarus government said. Once the amendments are in place, Belarus individuals will be able to trade cryptocurrencies only on exchanges registered with the country’s Hi-Tech Park (HTP).

In the statement, Belarus said its ministry was working on “legislative innovation” to prohibit crypto exchange transactions between individual users. 

27 Belarus national caught providing illegal crypto exchange services in 2023: Govt

As per the statement, the government claimed that since the beginning of 2023, its cybercrime counteraction units have stopped 27 Belarusian nationals who were allegedly providing “illegal crypto exchange services”. According to the statement, the total illegal funds earned by the accused through such activities totaled around 22 million roubles ($8.7 million).

The country’s government said with the legal amendments it plans to implement a mechanism that’s similar to the procedure of exchanging foreign currencies. The government believes that the new ban will make it impossible to withdraw the money earned through “illegal activities”. It would also make it unprofitable for such “IT fraudsters” to operate in Belarus.

With many new crypto coins slated to be launched this year, the suggested ban by Belarus might dampen upcoming altcoins’ global prospects.

The government’s proposed ban on P2P crypto transactions was met with a lot of skepticism on social media. A lot of crypto enthusiasts and experts have also questioned Belarus’ ability to implement the suggested ban. A crypto observer on Twitter even said: “Good luck enforcing it”. 

Other common kinds of fraud include duping people with misleading schemes promising rewards like how to make $100 a day with cryptocurrency.

A U-turn by a crypto-friendly nation?

The proposed ban can be seen as a U-turn by Belarus which has been a fairly crypto-friendly country in the past. In 2017, the country legalized transactions involving digital assets. It even featured in the list of Top 10 crypto tax-friendly nations compiled by blockchain data country Glassnode in 2023.

In 2020, the government-run Belarusbank rolled out a cryptocurrency exchange that enabled the country’s nationals and Russian citizens to purchase Bitcoin tokens with their Visa cards. Belarus had also introduced a new law to provide tax exemptions for businesses and individuals conducting cryptocurrency transactions. The law is due for a review later this year and it aimed to promote the digital economy. 

What are P2P crypto services?

By definition, peer-to-peer payments are a mechanism where one can transfer funds between bank accounts via a digital medium. The mechanism made its way to the cryptocurrency ecosystem after anonymous Bitcoin creator Satoshi Nakamoto mentioned P2P exchanges in the cryptocurrency’s whitepaper. Many crypto experts believe that banning P2P exchanges might be easier said than done. Bitcoin advocates like Jan3 CEO Samson Mow have said if not impossible, it’s going to be a difficult task. 

In an interview with a leading crypto website in June this year, Mow cited the example of China where many citizens still use P2P channels to trade cryptocurrencies despite the Xi Jinping government banning all crypto transactions for its nationals in 2021.

Globally, a P2P exchange or coin tracker is one of the most dependable sources of information on cryptocurrencies and even insights like what is the best time of day to buy cryptocurrency.

Disclaimer: This article was created for informational purposes only and should not be taken as investment advice. An asset’s past performance does not predict its future returns. Before making an investment, please conduct your own research, as digital assets like cryptocurrencies are highly risky and volatile financial instruments.

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