Belarus, notorious for being Europe’s last remaining dictatorship, has moved to implement more restrictions on cryptocurrency trading. In a post on social media app Telegram on Sunday, the Belarusian government announced plans to ban cryptocurrency transactions between individuals, citing concerns of criminal fraud.

However, for the sake of “transparency and oversight,” citizens will receive permission to conduct transactions through exchanges in the Belarus Hi-Tech Park (HTP). The park itself is located in the northeastern part of Minsk, the capital of Belarus.

Strict restrictions on digital currency

HTP also operates under the principle of extraterritoriality, whereby countries can extend their jurisdiction beyond their physical borders. Therefore, the company can be registered in any region of the country and at the same time fall under the jurisdiction of the HTP. Foreign companies can also register to operate in the HTP with limited physical presence.

The statement continued:

Applying a practice similar to the foreign exchange procedures will make it impossible to withdraw funds obtained through criminal means. Under these conditions, the work of IT fraudsters in Belarus will become unprofitable.

Belarus has regulated cryptocurrencies since 2017. Currently, there is only one locally registered crypto exchange in the country, called Currency.com.

The new law would be the latest in a long line of measures to restrict economic freedom. Belarus is the least economically free country in Europe, according to the Heritage Foundation, ranking 145 out of 176 countries globally. Freedom House gives Belarus 8 out of 10 points for freedom overall.

The Eastern European country is one of the few countries to actively “turn off” the internet after widespread 2020 protests following a rigged election.

Belarus ranks 25th in the Cryptocurrency Adoption Index

Cryptocurrency use has increased in recent years following the post-election campaign. Dissidents and protesters have turned to cryptocurrencies and virtual private networks to avoid financial repression and surveillance. In the latest Crypto Adoption Index by Chainalysis, Belarus ranks relatively high, at 25.

This year, the longtime autocratic president, Alexander Lukashenko, said the country should look to China for guidance on controlling the digital economy. The new private government body will look into formalizing regulations around the technology, according to news agency Belta.