Lukashenko Bets on Crypto to Build a Sanctions-Proof Financial Future

Belarusian President Alexander Lukashenko has directed the country’s banks to enhance their use of cryptocurrencies and tokenization in response to the economic pressures imposed by Western sanctions. Speaking in a meeting with senior banking officials, Lukashenko emphasized the growing importance of digital assets in facilitating international transactions and reducing reliance on traditional banking intermediaries. The president noted that the use of blockchain-based transactions has surged, with $1.7 billion in external payments processed via crypto exchanges in the first seven months of 2025, projecting this figure could reach $3 billion by year-end.

Tokenization, according to Lukashenko, offers the potential to automate transactions through smart contracts, minimize the role of intermediaries, and enhance user control over digital assets. This directive aligns with broader economic strategies aimed at adapting to a sanctions-driven environment. The move follows a 2022 law that sought to regulate crypto activity within the country, which has since seen rapid growth in the sector. The country's total crypto user base is expected to exceed 855,000 by 2026, reflecting a penetration rate of nearly 10% of the population.

The push for crypto adoption in Belarus mirrors similar developments in other Russia-aligned nations, including Kyrgyzstan, where crypto infrastructure has been used to circumvent international financial restrictions. Reports from blockchain intelligence firm TRM Labs have highlighted how Russian entities have leveraged Kyrgyz platforms, often operating as shell companies, to conduct transactions outside the traditional banking system. While Belarus has historically maintained a mixed stance on cryptocurrencies—legalizing transactions in 2018 while imposing bans on peer-to-peer exchanges in 2023—recent directives signal a strategic shift toward integrating digital assets into core financial operations.

Lukashenko has also emphasized the need for the development of a comprehensive digital payment system, including the adoption of QR code-based transactions and the implementation of biometric technologies. VTB Bank Belarus, a Russian-majority state-owned institution, has already introduced QR code-based payment options linked to the ERIP online system. The president also urged the banking sector to establish a dedicated IT company to reduce dependence on external service providers and to incorporate AI-based solutions into their operational frameworks.

The European Union has imposed extensive sanctions on Belarus since 2020, targeting individuals, entities, and institutions linked to the government. These measures include asset freezes, travel bans, and restrictions on financial services, with recent extensions targeting the country’s role in supporting Russia’s military actions in Ukraine. Despite these constraints, Belarus has continued to explore alternative financial mechanisms, including expanding cross-border trade via crypto platforms. This strategy reflects a broader trend among sanctioned economies to utilize decentralized financial systems to maintain economic activity while navigating geopolitical restrictions.

The adoption of digital assets in Belarus is being supported by major global crypto exchanges, including Binance, OKX, and KuCoin, which have seen increased volumes from the country. In a related development, the Belarusian government introduced a law in September 2024 that prohibits individuals from transacting in crypto outside of domestic exchanges. This measure aims to consolidate control over the growing sector and ensure compliance with national regulations. As the economy continues to adapt to external pressures, the integration of crypto and digital payment systems is expected to play a central role in shaping the future of Belarus’s financial landscape.