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Exclusive: Is Belarus the Heaven for Tokenized Exchanges?

Exclusive interview with George Paliani

In this interview with George Paliani, CBDO of Currency.com, we explored the fundamentals of the tokenization of assets and its underlying regulatory requirements. George explained that Currency.com is not just an ordinary exchange, where it is a platform with cryptocurrencies and traditional financial products such as commodities, indices, stocks, bonds. He then explained the key differences between security tokens and tokenized securities and the significance of “Decree No. 8” in conducting crypto-related business in Belarus.

What are the differences between security tokens and tokenized securities?

To understand the difference, you must be able to differentiate between traditional securities and security tokens. Security tokens represent tokens that have gone through security token offerings, as they have tokenized their assets. Each security token can represent partial ownership of a particular asset. We don’t list these tokens; we list traditional securities found in the traditional financial markets. We only list traditional assets from the financial markets that already exist and have done an IPO.

Tokenized securities, for example, Tesla shares, can be traded on the traditional financial markets. At Currency.com, we have tokenized it and put it on our platform. Not only can you trade cryptocurrencies on our platform, but many tokenized shares can also be traded on our platform as well. We offer our clients to trade traditional financial assets.

Users on Currency.com can use Bitcoin and Ether to purchase tokenized securities. How do you address the volatility concerns of these two cryptos?

We genuinely understand that volatility is a huge issue in the cryptocurrency markets. We solve this by a process by having our own version of stablecoins. Therefore, the funds deposited into your account from the bank will be the exact sum you will find in the Currency.com wallet, enhancing the trading process and user experience.

How does Currency.com compare to other competitors in the market?

One of the significant advantages that we have is regarding regulation. We are a fully licensed exchange, regulated by law and the government, audited by a big 4; we are entirely transparent about this with our users and the government.

We also offer margin trading with leverage of up to 100x, which is unique in this market. It is an option that we provide, and for professional traders, it is a very manageable risk.

Which regulatory approvals have been obtained to become the first regulated tokenized exchange?

We are a European regulated exchange, under the Decree No.8, which was issued in Belarus in December 2017. Being regulated, it allows us to operate in a completely transparent regulatory space. There is an ongoing development in the legal and regulatory space as they are adding more laws and decrees in Belarus; we consider it one of the best legal space to work in the twenty-first century.

Currency.com excluded the USA and the jurisdictions on the FATF list for 1000 tokenized securities to both private and institutional investors. What are the regulatory reasons behind this move?

We do not work with the FATF blacklist, not with the FATF countries. And we do not work with the US for the reason that for the financial activities related to crypto it is obligatory to get the MTL in the several states as well as the approval from the United States Securities and Exchange Commission (SEC).

Currency.com recently issued Belarusian government bonds, is it because of the special regulatory environment in Belarus? Which country’s government bonds will be the next?

Issuing the Belarusian government bonds was the first step as an experiment for us, as they were the first to be issued on our exchange. We have already offered this service to several counterparties, under an NDA. You will be able to see shortly that other bonds will also be on our platform available for traders.

Due to its success, subsequently, we have access to tokenize government bond number 252 with up to 4.2% per annum yield to maturity. The tokens will be denominated in USD, and each token is worth $1000. It can be reinvested into more bonds or other products on the platform and users that have purchased a whole token can request a transfer of the corresponding physical bond at any time.

As you mentioned, Belarus introduced “Decree No.8” last year to promote crypto-related business. How does Currency.com accommodate to this new regulation?

I would say that it is one of the strictest decrees that I have ever encountered. When you enter the Currency.com website to begin trading, you will need to follow the KYC instructions and procedures, as one of the most critical requirements. Necessary personal information would be required, such as your ID or passport as well as your proof of address; this process can be done in under five minutes.

AML, KYC procedures are all regulated and are under Decree No. 8. It is one of the most transparent and strictest decrees I have come across, which makes us one of the most transparent and regulated exchanges in the world. The authors who have written this decree, have extensive experience and are experts in the field.

Russian Intelligence are Hiding Embezzler and Former Wirecard COO in Belarus

Jan Marsalek, the former Chief Operations Officer of the now-defunct Wirecard payments firm, has been located in Belarus after supposedly heading to the Philippines to track down nearly 2 billion Euro missing from the firm’s spreadsheet. Jan Marsalek promptly disappeared shortly after undertaking an investigation for the Wirecard missing funds—which he claimed would clear him of any wrongdoing. However, new evidence suggests that he never made it to the Philippines at all, but has been in hiding with the help of the FSB, a Russian intelligence agency.Marsalek was reported to have entered the Philippines where he flew from Manila to Cebu and then on to China in June. However, the Philippines immigration authorities have asserted that there is no evidence he ever arrived or records of his supposed flight from Cebu City to China.

Where in the world is Jan Marsalek?

German Wirecard collapsed last week after auditors Ernst & Young raised the issue with a nearly 2 billion Euro hole in financial services provider’s books. The 40-year-old Austrian citizen, Marsalek, who held the position of COO of Wirecard since 2010, was in charge of the company’s Asian operations.

On 18 June 2020, Jan Marsalek along with the entire management team, was fired. Marsalek explained to his colleagues that he was going to the Philippines to chase and find the missing billions, in order to prove his innocence—only to go missing himself later that day.

Although there were airline bookings and immigration records that showed he had made his way to Manila on the 23 June and left onward to China, a deeper investigation by the Philippine authorities found that that the trip appeared to have been a distraction tactic, and immigration records had been forged on his behalf. IT was at this point that Marsalek became wanted by German and Austrian authorities on the charges of fraud and embezzlement.

According to a report by investigative journalists from Bellingcat, Der Spiegel, and the Insider on July 18, Marsalek has fled to Minsk, the capital of Belarus. In addition, the collaborative investigation also uncovered Russian immigration records and data kept by Russia’s Federal Security Services (FSB) that suggest that Russia’s security service had a long-standing interest in Marsalek, who used a number of different passports – including a third-country diplomatic passport – to visit Russia dozens of times in the last 15 years. In 2017, it appears that Russia’s security services are likely to have had met with Marsalek in Moscow on one of these trips.

Source: Bellingcat Report

The investigation points to Marsalek receiving help from Russia’s FSB intelligence, Bellingcat wrote:

“FSB has complete control over the Russian border service and thus over the centralized Russia-Belarus border database. Therefore any manipulation of data would have to be done at the behest of, or at least with the consent of, the FSB.”

Marsalek being free to traverse these FSB controlled borders undetected does appear to directly indicate collaboration between the former Wirecard COO and Russian Intelligence.

The data shared by Bellingcat shows that he flew to Belarus on June 19th and has not yet left the country.

Protests Erupt as Alexander Lukashenko Wins Disputed Landslide Election in Crypto Forward Belarus

In Belarus, a highly contested election victory for longstanding President Alexander Lukashenko over Svetlana Tikhanovskaya has erupted in protests. Despite the dispute, the Soviet forged dictator’s stay of power may be good news for crypto.

Protests and demonstrations broke out in Belarus as President Alexander Lukashenko’s re-election was announced in a landslide victory over candidate Svetlana Tikhanovskaya.

As reported on Aug 9, Lukashenko won the election with more than 80% of the vote which has been condemned almost universally as a rigged election and outraged surrounding European nations.

Challenger Tikhanovskaya publically condemned the results. She said, “I believe my own eyes, the majority was for us […] We do not recognize the election results. We have seen real protocols. We urge those who believe that their voice was stolen not to remain silent.”

Lukashenko, Belarus and Blockchain

Lukashenko has been the President of Belarus since the dissolution of the Soviet Union, which he incidentally voted against. He has been the only president in the office of the European nation since 1994, and is regarded as one of the last dictators in Europe.

Photo: Alexander Lukashenko (Wikimedia Commons)

Despite his flaws, Lukashenko has been innovative and forward-thinking in his technology policies and even legalized cryptocurrency and initial coin offerings in Dec. 2017.

In 2019, Lukashenko even proposed using the surplus power from the country’s nuclear power plant to mine Bitcoin and sell them to boost Belarus’ economy. The nuclear plant is under construction and set to be opened by the end of 2020.

Decree No.8

In December 2017, under Lukashenko’s guidance, Belarus adopted Decree No.8 which stipulates the right of physical bodies to perform mining activity and came into the country’s regulation in March 2018.

Belarus may be a small nation but under the disputed leader Lukashenko’s rule they have paved the way for cryptocurrency exchanges to operate in a completely transparent regulatory space. With ongoing development in the legal and regulatory space—Belarus has been considered as one of the best cryptocurrency spaces to work in for exchanges in the twenty-first century.

Lukashenko may hold power for now, but the nation of Belarus does not appear willing to let the Soviet relic hold on to power for too much longer, despite his penchant for innovation.

Crypto Exchange Refuses to Give Up Dissident Names to Belarus Government

Belarus government officials have demanded that a Ukraine-based crypto exchange, dubbed Kuna.io, disclose the names of potential dissidents that have leveraged their services.

Political protests erupt in Belarus

The request was made following month-long protests that occurred in Belarus in response to the election of authoritarian president Alexander Lukashenko. Working with a nonprofit initiative founded in August – Belarus Solidary Foundation (BYSOL) – Kuna.io has collaborated with BYSOL founder Andrej Stryzhak to deliver crypto donations to individuals that have suffered from unemployment and financial loss following their participation in country-wide protests that erupted against Lukashenko around August.

Exchange refuses to throw protesters under the bus

Now, Belarus’ Department of Financial Investigations, operating as a sub-branch of the country’s Committee of State Control, has demanded that the crypto exchange name the individuals that they have aided. Crypto exchange Kuna.io’s founder, Mikhail Chobanyan, has denied the request, much to the relief of BYSOL founder Stryzhak. Since the crypto relief fund is registered outside of Belarus, the country’s government has no authoritative power to stop the donations from happening.

Addressing the issue, Chobanyan stated that violence was not tolerated by his company and he will therefore not humor the demand, stating that he was also in full support of the Belarusian people:

“KUNA’s mission is an open and decentralized financial system. That’s why we support everyone who helps us and are ready to lend our support. We, just like the civilized world, don’t support violence and refuse to hold dialogue with the opponents.”

Stryzhak has shed more light on the matter, expressing gratitude towards the head of the Financial Investigations Department of the State Control Committee of Belarus for his assistance in furthering the Belarus Solidary Foundation’s cause.

The nonprofit organization was founded in August and has been donating Bitcoin to assist dissidents that have been repressed and have suffered financially due to their participation in the political strikes in Belarus.

BYSOL Bitcoin crypto relief fund

The initiative was launched by activists and was reported to have donated over $1.3 million to Belarusians impacted negatively by the nation-wide political boycott against Lukashenko’s reign.

Alexander Lukashenko is regarded as one of Europe’s last dictators. Despite his apparent conservative and “rightist” views, the President has been innovative regarding legalizing cryptocurrency.

Under his reign, Belarus has made its way to become one of the innovative countries regarding cryptocurrencies and coin exchanges.

Apple Demands that Telegram Block Channels Officiated by Belarus Protestors

Apple tech giant has told cloud-based messaging service Telegram to shut down three channels related to the Belarus political protests.

Apple forces Telegram to shut down channels

The three messaging channels in question are hosted by protestors against the allegedly rigged elections in Belarus that saw President Alexander Lukashenko re-elected. The channels have been flagged by Apple, as the social media streams reportedly name official members of Belarus’ authoritarian regime.

Under the pretext that the channels promote violence and are a threat to government officials’ safety as their names are revealed through the social media streams, Apple has demanded that Telegram delete the social channels.

On his end, Telegram founder Pavel Durov has expressed his disappointment, as he preferred not to hinder user activity on the messaging app. He said:

“I think this situation is not black and white, and would rather leave the channels be, but typically Apple doesn’t offer much choice for apps like Telegram in such situations.”

As shared by news outlet Meduza, the founder explained that despite Apple’s request, the channels will keep operating on other platforms. He said:

“My guess is that, unfortunately, these channels will end up being blocked on iOS, but will remain available on other platforms.”

Belarus demands dissident names, crypto exchange balks

The delicate situation comes at a time when Belarus’ political atmosphere is heavy, as the country is operating under Lukashenko, who is known as one of the last dictators of Europe.

Recently, Belarus government officials have demanded that crypto exchange Kuna.io name potential dissidents that have leveraged their services.

This request has been denied by the Ukraine-based coin exchange, as Kuna.io founder Mikhail Chobanyan has made his stance clear, despite running the possibility of never being able to enter Belarus again. He said:

“KUNA’s mission is an open and decentralized financial system. We, just like the civilized world, don’t support violence and refuse to hold dialogue with the opponents.”

Is decentralization the answer?

The forced shutdown of Telegram channels imposed by Apple has begged the question of whether decentralized alternatives would be a better solution for the future of digital innovation.

Decentralized alternatives could enable individuals such as Belarus protestors to voice their opinions without fear of a third-party intervention – in this case, the entity being Apple.

On decentralized applications, content can only be removed by the person who posted it in the first place. An example of an application that is based on a decentralized protocol is Voice, which leverages blockchain technology to provide a user interaction free of hidden algorithms.

Belarus President Alexandra Lukashenko Urges His Citizens to Embrace Bitcoin Mining

The president of Belarus, Alexandra Lukashenko, has urged his citizens to stay in their home country and start mining Bitcoin instead of working in other overseas countries.

The president said that during the Petrikovsky mining and processing plant opening last week on Friday, August 27.

Lukashenko clarified that his nation enjoys adequate energy resources to deal with those electricity-intensive activities that China has famously banned in May.

“Create something with electricity. After all, start mining cryptocurrencies or whatever it’s called. There is enough electricity in the country.” Lukashenko said.

Lukashenko urged Belarusians to stay in the nation and seek alternative sources of income such as Bitcoin mining instead of moving to Germany or Poland to fill farming job positions. The Belarus president mentioned the already existing locations that Belarusians could use to conduct Bitcoin mining, urging citizens to use the country’s abandoned industrial sites to mine cryptocurrency rather than move overseas to look for low-paying jobs.

Lukashenko reiterated that Belarusians are not wanted abroad, saying that foreigners are only waiting for Belarusians to pick strawberries.

“We must understand; they are not waiting for us anywhere. And if someone is waiting…maybe on the plantations, as Ukrainians often say, the Poles there or the Germans have to squirm, pick strawberries,” he stated.

Lukashenko, who became president in 1994, has been favouring cryptocurrency mining for a while. Belarus legalised Bitcoin-related business activities, including crypto mining, with Lukashenko approving the decision in 2018. In April 2019, the president suggested using the surplus power produced by the nuclear power plant in the Grodno region for Bitcoin mining.

Lukashenko argued that by using abundant energy that could otherwise go to waste, Belarusians could harness crypto mining and further increase their profit-making opportunities.

Bitcoin’s Energy Problem

Lukashenko’s remarks come when crypto mining recently faced fierce criticism worldwide for its negative environmental impact.

In May, the Bitcoin price dropped below $30,000 for the first time since January, after surging to an all-time high of almost $65,00 in mid-April.

While Tesla CEO Elon Musk’s tweets were one of the key reasons for such a price dip, China’s massive crackdown on cryptocurrencies was another major reason. China’s government intensified the crackdown on cryptocurrency mining and trading to prevent the transmission of individual risks to the social field.

Meanwhile, Bitcoin mining can be a very lucrative business in places with abundant, cheap energy sources. For example, two kids in Texas are making over $30,000 a month with cryptocurrency mining.

Since China issued a countrywide ban on Bitcoin mining, miners are moving overseas, and Belarus might also become a viable option due to its cheap electricity sources.

Belarus President Signs Free Flow Crypto Decree, Wallets to Come Under Central Register

Belarusian President Alexander Lukashenko has signed a decree that will allow the free circulation of cryptocurrencies but crypto wallet addresses will fall under a central register.

The Council of Ministers will implement the order within three months of its publication. However, the move will also give the national cryptocurrency regulator Hi-Tech Park (HTP) authority to create a register for crypto wallet addresses that are or can be used for illicit purposes.

Lukashenko signed the order with an aim to “protect participants in the digital asset market from loss of property and prevent unintentional involvement in activities prohibited by law,” the president’s press service announced.

The official announcement also said that “Belarus is consistently developing the legal field for regulating activities related to digital assets, and, unlike many other states, allows the free circulation of digital currencies. At the same time, this requires constant monitoring of the situation and, if necessary, supplementing and clarifying regulatory norms, including to exclude cases of shadow financing of prohibited activities.”

The document also specifies the procedure and standards for the government’s seizure of cryptocurrencies from offenders.

According to the document, wallet addresses will be added to the register if law enforcement agencies obtain data suggesting illegal operations or transactions related to extremism and terrorism.

Lukashenko has been a proponent of cryptocurrencies and has been reinforcing the country’s focus on cryptocurrency development, including cryptocurrency mining and trade.

In September 2021, Lukashenko called on his fellow citizens to mine cryptocurrency using unused electricity infrastructure.

Crypto activities in Belarus were legalised in 2017 after a presidential decree was signed and it was enforced in May of the following year. Tax breaks and other incentives for crypto businesses were also introduced accordingly.

Belarus ranks third in Eastern Europe in terms of crypto adoption even though cryptocurrencies cannot be used as legal tender, according to the Crypto Adoption Index by blockchain analytics firm Chainalysis.