Laos, a country situated in Southeast Asia, has authorized the mining and trading of cryptocurrencies. This move will help the country profit from Chinese miners as they can be an option in Asia for those who have suffered from the crackdown on digital currency mining in China.
Many analysts have said the move was a logical step for the country to take as it is known for producing a surplus of hydroelectric power, which will further make cryptocurrency mining green and eco-friendly while other analysts have warned that criminal gangs could seek to profit from the trade.
This move comes as a U-turn as the country’s central bank last month warned banks, companies, and residents against using cryptocurrencies.
The Prime Minister’s office in Laos this week stated that six companies, including construction groups and a bank, have been authorized to begin mining and trading cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.
According to a report from The Laotian Times, Government ministries will now work with the Bank of Laos and the national power utility company, to regulate the industry. The findings of the research and consultation are set to be discussed at a government meeting later this month.
The move into crypto comes at a time where the country has suffered significant losses in revenue from tourism caused by the Covid-19 crisis. This in turn also reduced demand for hydropower, a cornerstone industry in a country that has borrowed heavily to build dams on the Mekong River and its tributaries. This has led many to believe that the government may also be promoting cryptocurrency mining in the country in other to create a new source of revenue as it seeks to pay down the country’s almost $14 billion debt pile.
David Tuck, a Bangkok-based partner with Lyriant Advisory, a business intelligence consultancy stated, “However you cut it, Laos has an abundance of power generation capacity and it doesn’t have much internal demand for that power and one of the key requirements for crypto mining is massive amounts of power.”
David Tuck also explained that the use of hydropower to mine crypto might allow Laos to pitch the industry as “carbon neutral” at a time when the carbon footprint of cryptocurrencies was coming under growing international criticism.
The Laos government has vowed to step up efforts to fight money laundering, after coming under scrutiny from the Financial Action Task Force, the US and the UN Office on Drugs and Crime.
Zachary Abuza, a professor at the National War College in Washington, specializing in south-east Asia stated, “You should always be concerned when countries with poor regulatory records start to get involved in things like cryptocurrency. To say that the Laotian financial system is immature would be a brutal understatement, and we have to be concerned if they are rushing into this.”
The statement by Zachary Abuza comes as in 2018, the US Treasury placed sanctions on what it said was a transnational criminal organization run largely out of a casino in Laos’s Golden Triangle Special Economic Zone, operated by Hong Kong-based Kings Romans Group. Washington said the network stretched throughout south-east Asia and was involved in “horrendous illicit activities” including human trafficking, child prostitution and trafficking of drugs and wildlife.
Laos is home to 7 million people and has an abundance of green energy. The authorization does not only give crypto miners in China a home but also pushes the narrative that cryptocurrency mining is going green in the Asian region. This news bodes well for the cryptocurrency community and shows strong and general acceptance of cryptocurrencies in our everyday lives.