tl;dr
Belarus is increasing its reliance on cryptocurrency to counter economic challenges caused by Western sanctions. President Alexander Lukashenko has urged banks to adopt digital tokens as a means to bypass trade restrictions and support the economy. Over the past five years, the country has faced s...
Belarus is doubling down on cryptocurrency as a lifeline amid mounting economic pressure from Western sanctions. President Alexander Lukashenko, often dubbed the “last dictator in Europe,” has recently urged the country’s banks to accelerate the adoption of digital tokens, framing them as a tool to navigate the challenges of a shrinking economy and restricted access to global markets.
Lukashenko’s push comes after a stark admission: the Belarusian economy has faced “unprecedented challenges” over the past five years, with sanctions crippling exports and isolating the nation from key trade partners. “Now, act,” he reportedly told bank officials, emphasizing the urgency of leveraging crypto to bypass restrictions. His directive aligns with a broader strategy to position Belarus as a hub for digital finance, even as the country’s economy grapples with the fallout of its support for Russia’s invasion of Ukraine.
The numbers are striking. In the first seven months of this year, external payments via Belarusian crypto exchanges hit $1.7 billion, with projections suggesting that figure could balloon to $3 billion by year-end. Exchanges like Binance, OKX, and KuCoin—operating within Belarus—are expected to double their external transaction volumes, according to Lukashenko. Meanwhile, crypto user numbers are on track to surge: by 2026, Statista estimates over 855,000 Belarusians—nearly 9.5% of the population—will be using digital assets, a significant leap from current figures.
This isn’t the first time Lukashenko has leaned into crypto. In 2018, Belarus legalized crypto transactions, allowing residents to buy, sell, and mine digital assets. Last year, he signed a law restricting crypto trading to domestic exchanges, a move aimed at tightening control over the sector. Yet, his recent focus on expanding crypto usage reflects a pragmatic shift: the anonymous, decentralized nature of digital tokens makes them a potent tool for countries like Belarus to circumvent sanctions and facilitate trade, much like Russia and North Korea have done.
But Lukashenko isn’t stopping at crypto. He’s also pushing banks to adopt digital payment systems, starting with QR code-based transactions and aiming to launch an instant payment system by year-end. VTB Bank Belarus, a Russian state-owned bank, has already rolled out QR code payments linked to the ERIP online payment system, a step toward modernizing the country’s financial infrastructure.
The president’s vision extends beyond payments. He’s advocating for biometric technologies, AI-driven solutions, and a dedicated IT company to reduce reliance on foreign service providers. “Digitalization is not an end in itself; it must deliver tangible economic results,” he stressed, a sentiment that underscores his belief in technology as a means to economic survival.
Yet, Belarus’s crypto journey has been anything but smooth. In 2023, the government proposed banning peer-to-peer crypto transactions, a move that signals growing regulatory caution. This tension between fostering innovation and maintaining control highlights the nation’s complex relationship with digital assets. While Lukashenko sees crypto as a bridge to economic resilience, the government’s contradictory policies—legalizing transactions in 2018, then tightening restrictions—reveal a nation walking a tightrope between embracing the future and safeguarding its sovereignty.
As Belarus races to digitize its economy, the question remains: can crypto truly shield it from the weight of global sanctions, or will it become another casualty of the nation’s precarious balancing act? For now, Lukashenko’s bets on digital tokens are clear—a gamble on survival in an increasingly hostile international landscape.