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Can Belarus Use Crypto to Bypass Sanctions? Experts Are Skeptical

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As the massive protests in Belarus continue after a controversial election that saw President Alexander Lukashenko extend his mandate, questions arose about how Belarus could deal with potential U.S. and European Union sanctions and how cryptos such as Bitcoin (BTC) and Ethereum (ETH) could help bypass them.

An article published by Russian outlet, RBC, suggested that using cryptocurrencies could not be an effective option for the Belarussian government to beat financial sanctions that may be imposed by the EU and Washington on Minsk. According to The Guardian, the EU is moving forward with sanctions against Belarus.   

Valery Petrov, vice president of Market Development and Regulation for the Russian Association of the Crypto Industry and Blockchain, said in the article that the usage of cryptos is “a realistic option” to escape from sanctions. However, he clarifies, this is possible only “if it does not contradict external and internal legislation.”

Belarus has been showing a crypto-friendly attitude, as the recent developments in the sector across the country prove that the industry represents a significant business opportunity.

In May, Belarusian authorities said that they consider digital technology a top priority issue, and are preparing a digital economy resolution for the OSCE session in Berlin.

Belarus has also drafted a bill in July that addresses high tech IT spheres, including blockchain technology and cryptocurrency, among others, in the hope of attracting international investment in technology that were once forbidden or seen as too risky.

Petrov pointed to Venezuela and Iran’s case, as he says that the usage of cryptos to deal with economic crises or circumvent sanctions proves that cryptocurrencies are only a “palliative” solution.

Even other experts such as Nikita Zuboreb, a Russian analyst at crypto exchange, Bestchange, believes it could be only a “band-aid” solution for an economy that could be profoundly hurt by the sanctions.

However, he recalled that the IT infrastructure is “much more developed and prepared” than other countries and Lukashenko could still consider it an option.



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Regulation

El Salvadorians take to the streets to protest Bitcoin law

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Protesters calling themselves the Popular Resistance and Rebellion Block have come out against El Salvador’s government passing a law making Bitcoin legal tender.

A Tuesday tweet from local news outlet El Mundo shows El Salvadorians carrying banners saying “no to Bitcoin” in the streets of San Salvador demanding a repeal of the country’s Bitcoin law. Legislative assembly members Anabel Belloso and Dina Argueta addressed the protesters after first meeting the group separated by a barrier of razor wire.

In a letter made available at the protest, the Popular Resistance and Rebellion Block group claimed that President Nayib Bukele passed the law making the cryptocurrency legal tender in the country without proper consultations with the people. It also cited the volatility of Bitcoin (BTC), comparing investing in the cryptocurrency to playing the lottery: “betting on the lottery is a voluntary act, while Bitcoin is required by law.”

Related: Coercion and coexistence: How El Salvador’s Bitcoin Law may change global finance

However, the group’s main grievance around the Bitcoin legal framework seemed to be centered around a perceived disparity in the cryptocurrency’s usage by the government when compared with the average resident in El Salvador. Protesters said Bitcoin “only serves some large businessmen, especially those linked to the government, to launder ill-gotten money.”

“Entrepreneurs who put their capital in Bitcoin will not pay taxes on their earnings,” said the letter. “In addition, to apply Bitcoin the government will spend millions of dollars of the taxes paid by the people.”

They added:

“Bitcoin would facilitate public corruption and the operations of drug, arms and human traffickers, extortionists and tax evaders. It would also cause monetary chaos. It would hit people’s salaries, pensions and savings, ruin many MSMEs, affect low-income families and hit the middle class.”

Though passed by El Salvador’s government and signed into law by Bukele in June, the law recognizing Bitcoin as legal currency in the country will not go into effect until Sept. 7. The Popular Resistance and Rebellion Block’s protest was aimed at government officials to demand the law be repealed. In addition, the World Bank has also refused to help El Salvador transition to a Bitcoin-friendly framework, given its “environmental and transparency shortcomings.”

Related: What is really behind El Salvador’s ‘Bitcoin Law’? Experts answer

During a scheduled visit by the U.S. State Department earlier this month, Under Secretary of State for Political Affairs Victoria Nuland suggested El Salvador ensure Bitcoin is well regulated and transparent, but did not explicitly say anything against the country’s move to a more digital economy. Some proponents of the law including Bukele have suggested Bitcoin could help facilitate remittance payments from El Salvador citizens living abroad and lessen the country’s reliance on the U.S. dollar.