Banking & Finance

Don’t use Crypto Currencies, Central Bank warns

Date: 20 May 2019; Type: Legal News; Source: Vientiane Times

The Bank of the Lao PDR has warned commercial banks, businesses and members of the public not to buy, sell or use cryptocurrency for money transactions as this practice is illegal.

The central bank’s Transaction System Management Department recently issued the warning after learning that cryptocurrencies such as Bitcoin, Ethereum and Litecoin have been advertised for use on social media despite the fact that the central bank has banned the use of these currencies.

The department told banks and other financial institutions under the management of the central bank to strictly observe the announcement, which was issued in October last year, according to a source at the central bank.

The source said there was no security system in place to protect the users or customers of cryptocurrency transactions so there was no safety guarantee.

It is also difficult for authorities in charge to manage the use of these currencies because transactions can be done in such a way that the sender and receiver of the currencies are unidentified. This increases the risk of the use of cryptocurrencies in money laundering.

Financial institutions are advised not to transact or facilitate the purchase or sale of cryptocurrencies.

According to the source, some groups are advertising the purchase, sale and use of cryptocurrencies for money transactions through commercial banks, enticed by claims that this will generate income in some way - a claim that the authorities say is untrue.

A cryptocurrency is a digital asset designed to work as a medium of exchange that uses strong cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.

In its October announcement, the central bank prohibits financial institutions from possessing, engaging in, or encouraging cryptocurrency transactions.

These institutions have been banned from investment in and the purchase and sale of cryptocurrencies for their own benefit or the benefit of their customers.

They are also prohibited from offering cryptocurrency exchange services and creating a platform for cryptocurrency sale and purchase. Financial institutions are also prohibited from acting as brokers for their customers in cryptocurrency transactions among their customers.

Financial institutions are also forbidden from encouraging or giving consultation to customers concerning investment in or the exchange of cryptocurrencies.

Banks were told to be vigilant to ensure customers do not use their accounts for cryptocurrency transactions.

The central bank also warned financial institutions to be aware that ill-intentioned groups might use their names and logos to advertise cryptocurrencies.

Bank customers are not permitted to use any type of bank card, including credit cards, for the purchase of cryptocurrencies.

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