Despite crime concerns, Laos allows cryptocurrency trial – The Diplomat
The government of Laos has allowed six companies to test mining and trading in cryptocurrencies, the Laotian Times reported yesterday, despite concerns expressed that these currencies could be used to facilitate illegal activity.
According to an article in the Laotian Times, the trial will take place while a multitude of ministries work with the Bank of Laos and the state-owned electricity company Electricite du Laos (presumably due to the immense power required to extract crypto-currencies) to research and decide on the regulations governing the use of these pseudo-currencies in Laos. The results of the research and consultation between relevant ministries and organizations will then be discussed at a meeting this week.
With prices based on nothing beyond speculation on their future value, cryptocurrencies like Bitcoin, Ethereum, and Litecoin are known to be very volatile. It is therefore difficult to see how opening Laos’ $ 18 billion to borderless and flammable crypto markets will bring any benefit to the people of the country, especially given the multitude of other pressing issues facing the country. country is facing.
The anonymity of cryptocurrencies – cited as a major benefit by their boosters – has also unsurprisingly led them to be associated with all manner of criminal activity, from online scams to drug trafficking operations. This suggests that at best, Bitcoin and its counterparts have been largely oversold. At worst, they are an environmental hazard and a giant fraud.
For these reasons, the Chinese government recently launched a fierce crackdown on the technology, on reasonable grounds that its sky-high price swings pose a threat to the country’s financial stability. He banned crypto mining operations and ordered big banks not to do business with crypto companies. In June, the State Council’s Financial Stability and Development Committee said it would “resolutely prevent the transmission of individual risks to society at large.”
The government of Laos seems to understand these risks. Last month, he published an advisory warning the public against the use of unregulated cryptocurrencies, observing that they are “subject to extreme fluctuations and can be used as a means of payment for illegal transactions.”
According to a Laotian Times article, “Authorities have warned Laotian nationals against using or trading cryptocurrencies, citing the significant risks involved, such as their potential use in money laundering or the financing of terrorism ”. This makes it all the more surprising that the Laotian government is considering authorizing crypto technologies, which will only worsen the country’s crime problem.
Even though the government creates strict crypto regulations, it has little ability to enforce them. It is this low capacity that has turned Laos (and Cambodia) into attractive offshore bases for foreign businessmen – many from mainland China – who engage in illicit and criminal activity of all kinds.
In particular, Chinese organized crime syndicates have become deeply involved in the various illicit businesses – ranging from gambling and smuggling to trafficking in wildlife and narcotics – that thrive along porous and loosely guarded borders that stretch to across eastern Myanmar, southern China, and northern Thailand and Laos.
Laos is also becoming an increasingly important node in the networks of international drug traffickers’ unions which reap tens of billions of dollars a year from the sale of narcotics – mainly methamphetamine – produced in the regions. held by rebels and militias from Shan State in Myanmar, with which Laos shares a porous and poorly guarded border.
One example is the Golden Triangle Special Economic Zone (GTSEZ), a sprawling tourism and gambling colony in northwestern Laos that has attracted considerable attention for its alleged immersion in a range of criminal enterprises. In January 2018, the US Treasury Department imposed sanctions on its chief Zhao Wei and three associates for engaging in “drug trafficking, human trafficking, money laundering, corruption and wildlife trafficking, much of which is facilitated by the “Kings Romans Casino”, the development centerpiece of the GTSEZ.
If the Laotian government allows crypto mining and trading, it’s a safe bet that Laos would become an overnight hub for Chinese crypto operations displaced by the Beijing government’s recent crackdown. Likewise, it is difficult to see these operations benefiting anyone other than those who are wealthy, well connected, and engaged in businesses that would benefit from the cross-border mobility and anonymity offered by cryptocurrencies.
The government lawsuit may be an attempt to establish some form of control over the crypto before it gets out of hand; hence their warnings to the public on this matter. But creating regulations is one thing; their implementation is another. While Laos’ controversial series of hydroelectric dams would undoubtedly fuel a thriving crypto mining economy, there is little good – and a lot of bad – that can come to the country opening their arms to uncertain technology.