Friday, February 3, 2023

Blockchain May Hold Key to Economic Growth in Former Soviet Republics

Blockchain May Hold Key to Economic Growth in Former Soviet Republics

While the world’s largest countries remain hesitant about cryptocurrencies and blockchain – and often even hostile and distrustful – smaller countries have been embracing the technology in a bid to boost their struggling economies. One good example is former Soviet republics, such as Armenia and Belarus, which have been recently very serious about adopting the crypto economy.

Also see: Why Trust Old Vulture Capitalists Like Paul Singer on Bitcoin?

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Belarus made the headlines in late 2017, when it enacted the law “On the Development of the Digital Economy,” becoming one of the first countries in the world to legalize cryptocurrencies, crypto-mining and initial coin offerings (ICOs).

In accordance with the legislation, digital token transactions will be tax-free, and residents will be exempt from value-added tax on any transactions involving coins or tokens through January 1, 2023.

In addition, cryptocurrency mining and exchange won’t be considered entrepreneurship, so companies and individuals operating in the area won’t need licenses or any other form or registration.

Kickstarting a Sluggish Economy

At first sight, that move by the Eastern European country, known for its authoritarian regime with President Alexander Lukashenko at the helm and heavily state-controlled economy, was unexpected.

However, Belarus has been looking for ways to kick-start its sluggish economy, dependent on energy supplies from neighboring Russia, without drastic reforms, such as sweeping privatization of traditional industries, for quite a few years now.

And the IT industry is one of the direction the country’s leadership has been exploring. Its High-Tech Park (HTP), which has been around for more than 10 years, reported a record $1 billion USD in exports in 2017, a 20 percent increase from the previous year.

Along the same lines, Belarus is launching university-level courses for cryptocurrencies and blockchain at the country’s flagship Belarusian State University this year.

Still, circulation of cryptocurrencies and tokens in Belarus remains limited, the country’s National Bank clarified in mid-February. Digital assets can be legally exchanged for Belarusian rubles and other fiat currencies, but they cannot be used to pay for goods and services for now.

Armenia fmr Soviet Union

Tax Breaks, Free Economic Zones in Armenia

The Caucasian republic of Armenia seems to be following closely in Belarus’ footsteps. Similarly to Belarus, the country has a track record in fostering development of techno parks and the IT industry and it is now preparing to step into the crypto space.

In early February, a draft law was proposed, stipulating that any company or a citizen over the age of 18 could legally conduct crypto transactions or mine cryptocurrencies, with no permissions or licenses required.

Through 2024, no taxes will be imposed on crypto-related activities, while the space will also enjoy tax exemptions and other privileges.

Earlier this year, Armenia announced plans to create a free economic zone for tech startups, among which blockchain-based projects are expected to be prominent.

Just like Belarus, Armenia struggles to achieve economic growth and has trouble doing so with the traditional industries. Incidentally, both countries also seem to benefit from the education system in math and related fields, which they inherited from the Soviet era.

Georgia, Ukraine Also Catching Up

Other former Soviet countries that have been making steps towards adoption of blockchain are Georgia and Ukraine. Both countries are running e-government systems based on the technology, but they are yet to make steps towards legalizing the crypto economy.

Can these countries leapfrog others to lead in the blockchain and cryptocurrency space? Let’s hear your thoughts.

Images via Pixabay

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