Central Bank Cautions Public on Digital Currencies
By Nan Lwin 3 May 2019
YANGON—The Central Bank of Myanmar warned against the use and trade of digital currencies and cryptocurrencies, including Bitcoin, saying the buying, selling or exchange of digital currency can lead to losses on the consumer’s side.
On Friday, the Central Bank released a statement saying it is the sole issuer and supervisor of the domestic currency after a series of scams targeted people who lack experience and understanding of cryptocurrencies.
Digital currencies, including cryptocurrencies like Bitcoin (BTC), Litecoin (LTC), Ethereum (ETH) and Perfect Money (PM), are being traded on personal Facebook accounts and websites and used as payments for individual use or services, the Central Bank said.
The Central Bank have not authorized the use of digital currencies, nor do they allow any organization to the trade in cryptocurrencies or digital currencies in Myanmar.
Cryptocurrencies are virtual currencies that do not exist in a physical form. They are not backed or regulated by any central bank. The decentralized control of each cryptocurrency relies on distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
Myanmar has no specific mechanism or legal framework to regulate cryptocurrencies. However, the coins’ promoters have introduced various ways to invest in them.
U Than Lwin, senior advisor to Kanbawza Bank Ltd (KBZ) and former deputy governor of the Central Bank of Myanmar, told The Irrawaddy there are three main reason why investing in cryptocurrencies should be avoided—the volatility of crypto markets, the difficulty in taking legal action in cases involving the currencies and the lack of consumer protection.
“The price is unstable all the time. Trading cryptocurrencies could result in losing everything you invested in them. It’s like gambling,” said U Than Lwin.
“Since it is a digital currency without physical form, there are many limits to imposing regulations on it. You won’t get help through legal action. People should be very careful before investing in it.” he added.
Last year, the Ministry of Home Affairs also warned against trading in cryptocurrencies, including in Bitcoin, after a wave of scams in Myanmar. The ministry warned that the coin promoters targeted people in rural areas who are uninformed about the market. It said cryptocurrencies are “unstable” and require careful study. It advised against investing in such currencies.
Cryptocurrencies came to popular attention with the inception of Bitcoin in 2009. The lack of regulation in cryptocurrency networks has been criticized as enabling criminals who seek to evade taxes and launder money. Transactions involving such cryptocurrencies are independent from formal banking systems, making tax evasion simpler.
Bitcoin itself is often targeted by cyber hackings and thefts, which cost billions of dollars a year. In 2014, the world’s then-largest Bitcoin exchange, Mt. Gox, declared bankruptcy after losing US$473 million (720 billion kyats) of customers’ bitcoins to cyber theft. In January and June 2018, Tokyo-based Coincheck and the Korean exchange Coinrail were hacked and lost $400 million and $37 million worth of cryptocurrency respectively. The thefts triggered falls in the values of all major cryptocurrencies.