Myanmar’s military junta explores cryptocurrency as its economy shrinks
In mid-December, Myanmar’s shadow government recognized Tether as an official currency. In an attempt to deal with this, the country’s ruling military regime has proposed a blanket ban on crypto. However, since crypto payments are difficult to trace, the ban was arguably not effective enough.
Now, in a more calculated move, Myanmar’s military government is preparing to launch its own digital currency. Officials say the virtual currency would be used to stimulate the economy and support national payments as its economy struggles since the coup. However, it can also be assumed that the military government aims to reduce the need for Tether with the launch of an official digital currency.
Meanwhile, the country’s economy has been badly affected by the military coup and is considered to be on the verge of collapse.
Myanmar and cryptocurrency: a turbulent history
In early 2021, Burma’s junta, a government led by military leaders, came to power after a military coup. The militant group jailed Aung San Suu Kyi, Myanmar’s state councilor and de facto leader of the country, a move that led to mass protests and a bloody crackdown by the military that claimed the lives of more than 1,500 civilians.
In a bid to overthrow the military rule, supporters of the country’s ousted leader created Myanmar’s shadow government, dubbed the National Unity Government (NUG). The group began raising funds for their “revolution” to overthrow the ruling military government.
In mid-December, the NUG adopted Tether (USDT), the world’s largest stablecoin, as its official currency. He also started accepting donations in Tether, which drew backlash from the country’s military regime. Earlier this year, the military regime proposed a ban on cryptocurrencies and even included a prison term of up to one year for crypto users.
However, since cryptocurrencies operate on a blockchain, a decentralized public ledger that stores transaction data, they cannot be effectively banned or even tracked. In other words, governments or other parties are not able to link crypto transactions to real users, of course, unless they use centralized exchanges with KYC.
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Myanmar’s ruling government seeks to launch its own digital currency
After a seemingly unsuccessful ban on cryptocurrencies, Myanmar’s military government has now adopted another strategy. The group aims to launch a digital currency in 2022, according to a Bloomberg report, which quotes the state’s top board spokesperson.
Major General Zaw Min Tun, the junta’s deputy information minister, said:
“We don’t know if we should do it as a joint venture with local businesses or by government alone. A digital currency will help improve financial activities in Myanmar.
The report did not disclose whether the digital currency would be a central bank digital currency (CBDC), which is a digital iteration of a country’s fiat currency. “At this stage, we are still learning about digital currencies and having discussions. We need to consider both the pros and cons,” said Win Myint, managing director of the currency management department of the Central Bank of Myanmar. .
A growing number of countries around the world are developing or planning to develop a CBDC. China, for its part, has been working on its e-CNY since 2014 and has only just launched pilot tests. According to the latest data, the Chinese digital yuan app has been used by around 140 million people. However, it still doesn’t have a specific launch date.
Therefore, some analysts believe Myanmar may not have the tools or technology to develop a CBDC. “We think the country is not in the best position to be able to pursue something like this,” said Kim Edwards, the World Bank’s lead economist for Myanmar.
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About the Author
Ruholamin Haqshanas is an accomplished crypto and finance journalist with over two years of writing experience in the field. He has a solid understanding of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi) and the emerging non-fungible token (NFT) market. He is an active user of digital assets for remittances.