Laos Initiates Pilot Project for Cryptocurrency Mining and Trading
On September 9, 2021, Laos announced a new pilot program to allow the mining and trading of cryptocurrency. Notification No. 1158, issued by the Prime Minister’s Office, provides for an electricity sale-purchase agreement with six companies involved in the pilot program. Under the notification, the six companies authorized by the prime minister to mine and trade cryptocurrency in Laos will pay a capped fee for energy they use in data processing or mining cryptocurrency. This effectively establishes a sandbox in which these six companies may mine and trade cryptocurrency—including on international cryptocurrency exchanges.
The Ministry of Technology and Communications (MTC) is in charge of coordinating the program, together with the Ministry of Finance, the Bank of the Lao PDR, the Ministry of Planning and Investment, the Ministry of Energy and Mines, the Ministry of Public Security, and Électricité du Laos. The MTC is also charged with drafting the rules of the pilot program and setting the conditions on which the participating companies can mine, sell, and purchase cryptocurrency in Laos. One of the six selected companies will also act as a coordinator for the other companies and report to the government on any benefits of cryptocurrency observed during the pilot program.
The next step is for the MTC to compile data analysis from each of the other government agencies and submit the conclusions to a meeting of the prime minister and the deputy prime ministers before the pilot program is implemented. The pilot program was originally scheduled to start in September, but there has not yet been any update on the implementation of the program, which nonetheless is expected to start in the near future.
Cryptocurrency development in the Lao People's Democratic
Republic (Lao PDR) has been evolving, albeit at a cautious pace. The government
has expressed interest in digital currencies and blockchain technology,
recognizing their potential for financial inclusion and economic growth.
However, regulatory frameworks remain limited, and the sector is still in its
nascent stages.
### Key Aspects:
1. *Government Stance*: The Lao government has shown
a mixed approach towards cryptocurrencies. While there is recognition of their
potential, concerns about volatility, illegal activities, and financial
stability have led to a cautious regulatory environment. In 2020, the Bank of
the Lao PDR issued warnings about the risks associated with cryptocurrency
trading.
2. *Blockchain Initiatives*: Despite the regulatory
hesitance, there have been initiatives exploring blockchain technology for
various applications, including supply chain management and improving
transparency in governmental processes.
3. *Local Projects*: Some local entrepreneurs and
startups are venturing into cryptocurrency-related projects, including
exchanges and educational platforms. However, these projects often face
challenges due to unclear regulations and limited infrastructure.
4. *Regional Influence*: The development of
cryptocurrencies in neighboring countries, particularly Thailand and Vietnam,
has influenced discussions in Laos. As these countries adopt more progressive
regulations, there may be pressure for Lao PDR to consider more favorable policies
for cryptocurrency development.
5. *Future Prospects*: The future of cryptocurrency in Lao PDR depends on the establishment of a clear regulatory framework and the government’s willingness to embrace digital currencies as part of its economic strategy. Potential collaboration with international blockchain firms and educational initiatives could further bolster development in this sector.
Overall, while there is potential for cryptocurrency
development in Lao PDR, significant regulatory and infrastructural hurdles
remain to be addressed.
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