The Central Bank of Myanmar has joined the view of many central banks across the globe that see cryptocurrency as a risky investment that should be avoided at all cost.
According to their official announcement, the Central Bank of Myanmar urged the public to stop trading cryptocurrencies to avoid losing money. The bank fears that promoters are taking advantage of inexperienced users to dupe them of their money.
Cryptocurrencies like Bitcoin Core (BTC), Ethereum and Litecoin are being traded in the country through Facebook profiles and other social media websites. This is quite risky, primarily because scammers have been known to hack social media accounts or use fake profiles to dupe investors.
While speaking on the matter to reporters, U Than Lwin, senior advisor to Kanbawza Bank Ltd (KBZ) explained there are three main reasons people should avoid engaging in crypto trade. These include volatility of crypto markets, the lack of consumer protection and the difficulty in taking legal action in cases involving the currencies. He argues:
“The price is unstable all the time. Trading cryptocurrencies could result in losing everything you invested in them. It’s like gambling.”
Last year, the Ministry of Home Affairs issued a similar warning after it received several reports of crypto frauds in the rural areas. Promoters targeted these investors because they lacked enough knowledge about the cryptocurrency market.
Recent reports from another country, Australia, showed that the number of scams have gone up by almost 200%. The report, which was done by the country’s Competition and Consumer Commission, showed that in 2018, there were 674 reported crypto scams in Australia. These cases resulted in losses of about AUD6.1 million ($4.3 million). This was a 190 percent increase from the AUD2.1 million ($1.5 million) lost in 2017.
Some countries are taking action to help their investors. Malta, one of the most crypto friendly nations, recently issued warnings and guidelines that will help investors avoid falling victims to crypto scams. The Malta Financial Service Authority (MFSA) published the guidelines to educate investors. This educative initiative outlines several warning signs that investors could use to identify a fraud scheme.
Among the published warnings include unrealistically high rates of return which are usually higher than the market average, aggressive selling techniques which put pressure and rush you to secure a sale, the business being unregulated and promises that any funds deposited are 100% guaranteed.
Myanmar and many other countries should follow Malta’s example and provide the much-needed education to its citizens. This will ensure every investor makes an informed decision when dealing with cryptocurrencies.
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