Laos central bank warns against crypto use

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The central bank of Laos has warned the public against the purchase, sales and use of digital currencies in making payments.

In a notice dated August 29, the Bank of Lao (BOL) through its Transaction System Management Department stated that crypto transactions are considered illegal in the country.

The bank noted that, despite its previous ban that prevented institutions from conducting crypto related businesses, many are still making investments in the cryptocurrency market through social media platforms. The central bank pointed to the current Law on Payment Systems (last revised in November 2017) that refutes cryptocurrencies as payment instruments after finding they do not meet the standards required for classification as a currency. A senior central bank official said while speaking to reporters:

“It is not [a] real currency like Lao kip or Thai baht, because it is unable to pay debts. It is a digital record of a transaction. Law does not yet regulate it. People who get involved in the use of cryptocurrencies are taking risks if the digital system fails.”

The bank is also concerned with the supposed anonymity of the sender and receiver in a cryptocurrency transaction, which encourages illegal activity and money laundering. Additionally, some sources have revealed that authorities in the country do not have a relevant security system to protect cryptocurrency users.

BOL’s view on cryptocurrency is one shared by many. Laos’s neighboring country to the east, Vietnam, has also taken a hostile approach towards digital currencies. Currently, there is a ban on crypto payments, which tacks a fine of up to $9000 on the activity, as well as criminal prosecution.

Adding to the anti-crypto fire, a California congressman, Brad Sherman, recently called for a full ban on cryptocurrencies. Sherman claimed that crypto presents a threat to the power of the U.S. dollar to affect world economic developments.

Others like Malta, Canada, and Switzerland have embraced digital currencies going as far as creating regulations to cater for both crypto and initial coin offerings.

However, the European Central Bank (ECB) is not for or against crypto. In a recent report, ECB explains that crypto assets pose no threat to the financial stability of the euro as they do not fulfill the functions of money in their current state.