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Is Myanmar ready for cryptocurrency?

The recent coverage of Chinese blockchain company Shellpay Internet Technology Co’s plan to issue digital coins in eastern Shan has sparked widespread social media attention on the cryptocurrency industry.

Cryptocurrencies are digital currencies that has no physical form. Unlike cash, they have decentralised control and does not require a central bank or federal reserve. Blockchain technology is typically employed, under which all transactions are recorded on an encrypted public ledger. The first and most popular cryptocurrency is Bitcoin, launched in January 2009. Bitcoin has a limited supply like gold and its value is driven by market principles and consensus.

Overall, the cryptocurrency industry is growing but is still struggling to achieve mass market usage.

There is no regulatory framework for digital coins in Myanmar. The Central Bank of Myanmar does not have any regulation, permission or restriction regarding the trading of cryptocurrencies.

While the US security watchdog has warned coins issued in initial coin offerings could be regarded as securities and subject to relevant legislation, the Securities and Exchange Commission of Myanmar has yet to intervene on the issue thus far.

Last year, the Ministry of Home Affairs warned against trading in cryptocurrencies including Bitcoin, after a wave of scams was reported in the media.

Lawyer Nishant Choudhary, DFDL’s head of banking and finance practice, said it may take a while before Myanmar formally opens up the cryptocurrency market.

“With societal and educational issues plaguing Myanmar and particularly in remote parts like Shan State, where a significant chunk of the population stands largely uneducated when it comes to technology, cryptocurrency may not be the best option as of now,” he explained. Additionally, Myanmar does not have an internet space robust enough to protect it from cyber threats and fraudulent risks.

For now, domestic lenders appear to keep their distance from digital currencies.

A representative of mobile financial service provider Wave Money warned that since cryptocurrencies are not regulated by the central bank, those who invest into this asset class “will not be protected by the laws and regulations of Myanmar that have been put in place to ensure depositors funds are safe.”

This is echoed by a long-time Myanmar observer, who told this paper that Myanmar people should be aware that many cryptocurrency schemes are “little more than fantasies, frauds and fads, like the South Sea Bubble and the tulip craze of the 17th century.”

Myanmar Securities Exchange Centre has not responded to requests for comment by press time. Yangon Stock Exchange declined to comment.

SOURCE: MYANMAR TIMES

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