Belarus just announced an official restriction on any peer-to-peer cryptocurrency transactions, essentially trying to put a cinch on any private digital currency activity. The official reason is to help stop cybercrime activity in the country (coming from an institution that basically acted like an organized crime syndicate on its protesting citizens back in 2020). In any case, the goal is to shut off any P2P activity, period, forcing any legal crypto activity to happen only through approved exchanges. Well, that's nice for Belarus, but why do we give a darn?

Tin pot countries and their dictator type operations tend to be used or analyzed like petri dishes in governmental analysis. They provide extreme case studies on how things can work put to an extreme. Developed countries and their analytical think tanks use these case studies all the time to see the extreme possibilities of policies combined with types of governmental execution. For anyone who has been tortured in a course on International Relations Theory, you know exactly what I'm talking about.

In the case of Belarus, the country's government is utilizing all the traditional means of blocking financial activity, basically to cut off access to fiat channels through which a crypto user would convert their digital funds to fiat and actually be able to use it in everyday activities on the street. How successful this campaign will be depends on how responsive crypto users are. Many pundits will argue if they can't see a wallet, they have no clue. However, this underestimates the power of government at a pervasive level.

First off, let's assume Belarus is in full dictatorial mode. That means it would likely have a grip on all internet service providers (ISPs) in the country. This already provides a key filter point by which to track and find anyone using particular software or transactions associated with crypto. Since Internet traffic, as well as cellular traffic, has to go through these key bottlenecks, everyone in Belarus would get screened. Second, with a legal restriction in place, and threat of penalty, most users aren't going to take a risk of ending up in a prison cell for digital fund activity. Belarus has already proven how willing it is to lock people up without any due process. So, those who have sizable funds will either end up having to move them to approved exchanges or, let their wallet go cold until such time they are out of the country and can access the wallet in another jurisdiction using a non-Belarus ISP.

Second, don't forget taxation rules. Anyone making income typically has to declare it. If you're earning income without declaring it, then, regardless of being digital or not, you've violated tax rules and face penalties. It would not be surprising for Belarus to institute the same to force people to report all income. This is not draconian; most developed countries already have this rule in general for income tax collection. Where Belarus was original one of top 10 countries that were crypto friendly tax-wise, the country is busy rewriting those rules in 2023.

Interestingly, the goal again has been to find and track crypto transactions that are otherwise invisible or private, and out of sight from the Belarus government. Assuming everyone is forced into a formal official channel, that won't stop crypto fraud. The old hand of laundering funds through "legitimate" activities would easily come into play, even on official exchange platforms. Looks like a duck, smells like a duck, must be okay money transfers, right? Belarus officials know this; money laundering and black markets have been around for decades since Belarus was first absorbed into the Soviet Union.

Instead, the current announcement is really a grab at shutting down privacy altogether. That's far more consistent with the current Belarus government position and in line with how it has treated its citizens in the last 5 years. In fact, many countries see blockchain transparency as paramount for national security. Both the U.S. and Canada, for example, have been moving in the direction of restricting privacy channels in crypto over the last year. And, the last thing Belarus wants is to see an insurrection in its borders funded via crypto by Ukraine. So, reading between the lines, Belarus is probably really posturing to make it clear to Ukraine outfits and similar that their crypto channels for inroads have been compromised.