While large nations like the United States, the United Kingdom, and others are still sitting on the fence in terms of cryptocurrency regulations, smaller nations such as Malta, Belarus, Bahrain, and others have implemented clear cut guidelines for bitcoin-linked businesses, making these regions a hotbed for startups, reports Reuters on July 29, 2019.
Small Nations Attract Cryptocurrency Firms
According to a Reuters report, during the initial coin offering (ICO) boom of 2017, entrepreneur Viktor Prokopenya met with Belarusian President Alexander Lukashenko to discuss some pressing issues.
At the end of the meeting, the President asked Prokopenya to propose regulations that would boost the nation’s financial technology (fintech) sector and the latter collaborated with local information technology firms as well as lawyers to draft guidelines that would promote the growth of the Belarussian distributed ledger technology (DLT) industry as well as its cryptospace.
Since then, Prokopenya’s rules have been governing bitcoin-linked businesses in the region, making it easier for interested entities to launch their cryptocurrency trading venues or trade bitcoin on existing regulated exchanges.
Commenting on the mater, Prokopenya revealed that the Belarussian digital assets regulation was designed from the ground up, in a way that is neither too harsh nor too soft.
“The idea was to build everything from scratch, to ensure it is free in some of the key aspects and very stringent in other aspects it needs to be,”
While major financial centers like London and others which are yet to draft crypto-specific rules might be attractive to big institutions seeking safety, the regulatory complexity and costs in these areas present crypto startups with a seemingly high barrier for entry.
Greener Pastures for Crypto-Startups
In December 2018, the President of Belarus signed the Presidential Decree on the development of the region’s digital economy.
Specifically, the decree creates a robust legal framework for buying, selling, exchanging, creating and mining bitcoin and other cryptocurrencies, making Belarus one of the first nations to put in place comprehensive regulations for blockchain-based businesses at the national level.
Also, countries like Malta, Gibraltar, and Bahrain have also followed the same route as Belarus, providing regulatory clarity, tax breaks and other perks in a bid to attract fintech startups to their shores and create jobs for the masses.
Commenting on the proactive approach of these so-called small nations towards emerging technologies, Jesse Overall, a lawyer specializing in crypto regulation at Clifford Chance in New York, noted that both companies and nations have a lot to gain from amenable crypto regulations.
However, nation-states adopting a liberal stance towards these digital asses need to ensure they get the rules right at all times in order not to promote the illicit use of cryptocurrencies.