Cryptocurrency Regulation in Myanmar

The unstable politics of Myanmar and the coup in 2021, the collapse of the kyat and capital controls have encouraged the citizens to consider the possibility of using digital assets as a tool to remit, save and finance resistance. Nevertheless, the Central Bank of Myanmar (CBM) considers any such activity to be illegal, and the possibility exists that any trading, exchanging or facilitating the crypto transaction can lead to a prison term or a financial fine, and financial institutions are not allowed to engage with the asset type.

Historical Context

May 2020: According to CBM Notification 9/2020, the residents are strictly prohibited to sell, buy and trade Bitcoin, Litecoin, Ethereum, Perfect Money and other tokens on social media or any other location.

December 2021: The opposition National Unity Government (NUG) declares Tether (USDT) legal tender in the regions that it holds to circumvent junta currency controls.

May 2024: CBM reiterates that unregulated transactions of digital currencies are punishable, and they would close bank accounts as well as accuse them of AML and banking laws.

2024-2025: With this kind of threat, the amount of peer-to-peer transactions that are being carried out on Telegram and offshore exchanges grow tremendously, and stablecoins, especially USDT on Tron dominate informal international payments. 

Regulatory Framework

CBM is the only issuer of currency and it has defined crypto as an unrecognised, unregulated instrument and that gives it authority to freeze bank accounts and initiate criminal charges. Enforcement levers including the Foreign Exchange Management Law, Financial Institutions Law and AML laws are provided, and licensing regulations, sandbox regulations and tax circulars addressing virtual-asset activity have not been issued by any ministry.

Crypto-linked transfers, thus identified as large, are considered suspicious and can be investigated with the application of the Anti-Money Laundering Law; any gained profit is theoretically subject to taxes as other income, but cannot be reported practically due to lack of legal status.

Crypto Policies in Myanmar

Legal status: Digital currency is not legal tender and cannot be used to pay on-shore; neither ownership nor trading is expressly criminalised, but trading is.

Mining: Mining is not directly prohibited, but persistent energy shortages, combined with the threat of the equipment confiscation, keep it on a low, clandestine scale.

Exchanges: No exchange, domestic or foreign, with CBM authorisation; nationals turn to informal OTC desks, hundi agents or offshore platforms reached via VPN.

Government projects: There are no blockchain plans by the military government, but the Spring Development Bank of the NUG, implemented on Polygon, is offering diaspora remittances, gold-backed savings and USDT rails to finance resistance communities.

Crypto Innovation Approach

Grassroots developers are targeting ultra-low-bandwidth solutions like USSD wallets, Telegram bots and QR codes that keep functioning even during internet blackouts to allow vendors to receive payment in cash the same day in stablecoins. Diaspora agencies relay donations in Bitcoin or USDT to humanitarian field-based relief agencies, and NGOs believe blockchain can be used to conduct transparent relief-fund monitoring in areas where connectivity can be achieved.

Challenges and Issues

• Legal danger: Banking, forex and AML laws put users at risk of arrest, which discourages mainstream adoption.
• Connectivity lags: There are frequent internet outages and low smartphone adoption by rural users which limit access to wallets.
• Volatility and frauds: There is no consumer protection, so pump-and-dump tokens and imitation exchange pages are rife on Facebook.
• Currency defence: Authorities are worried that the stablecoins will further undermine the confidence in the kyat and bleed the limited foreign reserves.
• Sanctions pressure: Western pressure points limit large exchanges to work directly with Myanmar, directing them to shadowy solutions.

Critical Regulatory Tends and Opportunities

Stricter enforcement: CBM is drawing new AML guidelines to target mobile-money operators to identify crypto-linked transfers exceeding USD 1 000 equivalents; suspected accounts to be closed faster than before after May 2024.

Opposition funding: the official adoption of USDT by NUG has encouraged merchants in the opposition strongholds to begin to price in stablecoins, a practice that is set to increase further should the ground conditions continue to be fragmented.

Local power: Myanmar tech communities are monitoring the sandbox regime of neighbouring Thailand and the FinTech decree of Vietnam, which will both be monitored as possible post-conflict digital-asset regimes to adopt.

Humanitarian corridors: International NGOs are urging the issuance of limited-purpose licences to transfer aid funding on-chain, citing that the transparency of blockchains could be used to cover donor-audit obligations without requiring money to be transferred via junta-controlled banks.

Conclusion

There is a regulatory dichotomy in Myanmar: an official blanket ban on cryptocurrency trading by the military-led CBM and an expanding underground scene which uses stablecoins to survive, send money home, and protest. The future governments will decide whether harmonised regulation or extended prohibition of digital assets will transform them into a driver of financial inclusion or continue to provide an underground lifeline to the fringe of the nation.

FAQs

1. Is cryptocurrency legal tender in Myanmar?

No, and the Central Bank does not accept any digital asset as money. To be legal all domestic payments have to be made with kyat or an authorised foreign currency.

2. It is possible to own bitcoin without violating the law, is it?

That of mere possession is not specifically criminalised, however, any buying, selling or exchanging contravenes CBM directives. Banking and AML laws impose fines and jail time to violators.

3. Do local crypto exchanges have a license?

No platform is authorised because there is no licensing regime. Trading thus takes place on an informal basis or through offshore services which are reached through VPN.

4. What was in CBM Notification 9/2020?

It also prohibited the residents to trade in cryptocurrencies like Bitcoin, Ethereum and Perfect Money. The warning was directed at Facebook-based trading pages and it threatened legal action.

5. Has a stablecoin been recognised by an authority?

Yep–in December 2021 the opposition National Unity Government made Tether (USDT) the legal tender to evade the junta financial restrictions. The military government refuses that statement.

6. Is Crypto mining illegal in Myanmar?

Mining is technically not illegal but unreliable power and the possibility of the ability to be confiscated make large scale mining impossible. Diesel generators are used to operate small-scale rigs in the cities secretly.

7. What is the tax on crypto gains?

Theoretically, the profits are classified as either other income and may be subjected to a personal-income tax of up to 25 percent. Practically, there is no compliance since the status is not recognised and OTC settlement is not very effective.

8. What are the possible penalties that the traders can face?

Under the central bank law and the financial institutions law, offenders can have their bank accounts frozen, get fines or jail terms. The May 2024 notice by CBM reemphasized its decision to prosecute.

9. Do humanitarian organizations practice blockchain in Myanmar?

A few NGOs conduct pilots of crypto-based cash transfer, to bypass the bank-blocking, although its scale is constrained by network connectivity and donor-compliance challenges. Projects are very experimental.

10. Will regulation become different following the conflict?

The expectations of tech evangelists and local tendencies indicate that a future civil government may outline a sandbox or licensing system. Before that, prohibition and informal use will probably coexist.

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