Belarus Doubles Down on Crypto Amid Sanctions

Belarus is pushing its banking sector to actively adopt cryptocurrencies and tokenization as a means of circumventing Western sanctions. President Alexander Lukashenko has emphasized the growing role of crypto in facilitating payments, especially international ones.

According to Lukashenko, external payments via crypto exchanges have already reached $1.7 billion in the first seven months of the year, with projections estimating a potential volume of $3 billion by the end of the year.

Tokenization as a Key Strategy

The Belarusian government also sees significant potential in tokenization for the financial sector. Lukashenko believes it can reduce intermediaries, automate transactions using smart contracts, and give users more control over their assets.

He has directed banks to expand their use of digital assets, framing this move as a direct response to sanctions and a way to maintain crucial external payment channels. The emphasis is on achieving tangible economic benefits from digitalization.

Sanctions Skirting: A Regional Trend?

Belarus's push into crypto mirrors similar trends observed in other countries aligned with Russia, such as Kyrgyzstan. Reports suggest that Russian entities have been using Kyrgyzstan's burgeoning crypto industry to evade sanctions. The Kyrgyz crypto market, previously negligible, has experienced rapid growth driven largely by demand from Russian users.

Links have been established to the sanctioned Russian exchange Garantex, with Kyrgyz platforms allegedly functioning as shell companies.

EU Sanctions on Belarus

The European Union has imposed extensive sanctions on Belarus in response to the disputed 2020 elections and the country's support for Russia's war against Ukraine. These sanctions include asset freezes, travel bans, and restrictions on financial transactions, impacting numerous individuals, entities, and businesses linked to the Belarusian government.

Key Takeaways:

• Belarus is actively promoting crypto adoption within its banking sector to counter the impact of Western sanctions.
• Tokenization is seen as a critical tool for streamlining financial transactions and reducing reliance on intermediaries.
• The move reflects a broader trend among some countries to use crypto to circumvent international sanctions.