The Central Bank of Myanmar (“CBM”) in its most recent announcement on 3 May 2019 finally clarified that it does not recognize digital currencies such as cryptocurrency as legal tender.
In the announcement, the CBM went further in stating that transactions and exchanges (including through online platforms such as Facebook) involving digital currencies such as Bitcoin, Litecoin, Ethereum, Perfect Money and other currencies of a similar nature are not recognized as legally permissible transactions.
Financial institutions such as banks and non-bank financial institutions have also been instructed not to engage in any transactions involving digital currencies.
Through this announcement, the CBM has also brought it to the public’s attention that since digital currency is not recognized as legal currency, any person using or rendering services in relation to digital currencies including cryptocurrency (personally or through the internet) runs the risk of breaching relevant regulations. While the announcement does not clarify what these risks are, we believe that the CBM refers to general transactional risks associated with unregulated exchanges. The announcement also does not specify any penalties for dealing in digital currencies.
The cryptocurrency boom in Asia over the past few years has been sizeable. Certain countries such as Singapore, Japan and Thailand have a well-organized regulatory framework dealing with cryptocurrency. The Myanmar market at present is ill-equipped to handle such a digital fintech wave due to several plaguing problems. With most of Myanmar’s population not very well acquainted with modern technology, the proliferation of cryptocurrency may not be the best option in Myanmar for now. Myanmar also suffers from significant technical infrastructural deficits making it further prone to cyber threats and other risks of fraudulent activities.
The announcement has nonetheless cleared up the persisting confusion as to whether or not the Myanmar government recognizes cryptocurrency. With the growth and gradual maturity of Myanmar, we hope that the country will soon be able to handle the unique mechanisms of and possibilities presented by cryptocurrency which would then need to be regulated by the CBM.
Partner, Managing Director
Deputy Managing Director,
Head of Banking & Finance Practice
The information provided here is for information purposes only and is not intended to constitute legal advice. Legal advice should be obtained from qualified legal counsel for all specific situations.