“In terms of average revenue per user, the Cryptocurrencies market in Myanmar is estimated to be US$31.4 in 2024.”
Overview of Crypto Adoption in Myanmar
Political challenges and economic pressures fuel Myanmar's relationship with cryptocurrency. In a country where the military government’s monetary policies have tightened financial control, many citizens are turning to crypto as an alternative.
The military government’s use of currency manipulation to fund its operations has left people seeking ways to protect their money and freedom. This has made digital assets an appealing choice. For instance, informal hundi transfer channels and the use of stablecoins like Tether highlight a grassroots demand for financial independence.
Interestingly, the National Unity Government (NUG), Myanmar's opposition group, has even promised to recognize Tether as legal tender. This move aims to sidestep the military government's centralized monetary policies.
Despite these developments, the road to crypto adoption in Myanmar is still very narrow. First, you have to note that trading (buying and selling) of cryptos is illegal in Myanmar. Also, limited internet access and regulatory uncertainties present significant challenges.
However, the potential for blockchain to empower ordinary people and support democratic efforts keeps the conversation alive. Whether through informal trade or official recognition, Myanmar’s growing crypto usage showcases the power of digital currencies in the fight for freedom and economic stability.
“The number of users in the Cryptocurrencies market in Myanmar is expected to grow significantly, reaching 1.33m users by 2025.”
Current Economic Situation in Myanmar
Myanmar's economy remains filled with challenges, primarily stemming from the military coup in February 2021.
The country's GDP contracted significantly following the coup, with an 18% decline in 2021 and ongoing instability causing slow recovery. By 2023, Myanmar’s economic growth remained at just 3%, far below its pre-pandemic levels.
The political turmoil has led to widespread poverty, with nearly half of Myanmar's population now living below the poverty line. Employment opportunities have dwindled, especially in sectors like garment manufacturing, which, despite a rise in exports, suffers from poor working conditions and reduced labor demand.
Also, real wages in Myanmar declined by approximately 15% between 2017 and 2022, worsening household financial insecurity.
Inflation is a pressing issue, driven by a depreciating kyat and disruptions to supply chains. Essential goods, including food and fuel, have become increasingly unaffordable for many. Rural communities, in particular, face severe food insecurity due to declining agricultural yields and restricted market access.
Environmental disasters, such as Cyclone Mocha in May 2023, have also worsened the situation. This disaster devastated coastal regions and showed Myanmar's vulnerability to natural hazards despite weak disaster response mechanisms.
These economic pressures have pushed some citizens to seek alternative financial systems, including cryptocurrency. Informal networks and digital assets are viewed by many as tools to bypass the military's control over traditional banking and currency systems.
“User penetration, which measures the percentage of the population using cryptocurrencies, is projected to be 2.40% in 2024. It is expected to increase to 2.40% by 2025.”
Current State of Crypto Adoption in Myanmar
Crypto adoption in Myanmar remains limited and also filled with challenges due to regulatory uncertainty, socio-political constraints, and financial instability.
As of 2024, the Central Bank of Myanmar (CBM) has not formally recognized cryptocurrencies, and there are no comprehensive legal frameworks governing their use. In fact, trading of cryptos is illegal in Myanmar. If one insists on buying and holding, it would be against the law of the land.
Also, the CBM has issued warnings cautioning the public about risks such as market volatility, potential scams, and the association of digital currencies with illicit activities. This regulatory vacuum deters institutional and individual adoption. It also leaves users vulnerable to market and legal uncertainties.
Despite these barriers, interest in cryptocurrency is growing among tech-savvy segments of Myanmar's population, particularly young adults. Factors such as financial inclusion, cross-border remittance potential, and access to global digital economies are driving informal adoption.
However, the lack of consumer protections and absence of regulatory clarity hinder widespread trust and investment in this sector. The country’s broader economic transitions and emphasis on stabilizing traditional financial systems further delay cryptocurrency integration.
Nonetheless, the growing regional adoption of blockchain and crypto could serve as a catalyst for Myanmar to reassess its strategies in the near future.
Factors Driving Crypto Adoption in Myanmar
Cryptocurrency adoption in Myanmar is influenced by several key factors, rooted in the country's socioeconomic and technological context:
Economic Instability and Currency Devaluation
Myanmar's fluctuating economic conditions and the depreciation of its local currency, the kyat, have pushed individuals and businesses to explore cryptocurrencies as an alternative store of value. Digital assets, particularly stablecoins, are seen as a hedge against inflation and currency volatility.
Limited Access to Traditional Banking
With a large portion of Myanmar's population unbanked or underbanked, cryptocurrencies offer a viable alternative for financial inclusion. Blockchain technology enables cross-border payments and remittances without requiring access to conventional banking systems.
Increased Mobile and Internet Penetration
As internet and smartphone penetration rises, more people in Myanmar are gaining access to digital platforms. This enables easier engagement with cryptocurrencies and blockchain services.
Regulatory Gaps and Opportunities
The lack of strict regulations around cryptocurrency use has created a space for innovation and adoption. However, this also presents risks, as regulatory clarity is crucial for sustained growth and investor protection.
Rising Interest in Decentralized Finance (DeFi)
DeFi platforms are becoming attractive in Myanmar for offering financial products like loans, savings, and investments without traditional intermediaries.
“The projected revenue for the Cryptocurrencies market in Myanmar is expected to reach US$41.5m by the end of 2024.”
Cryptocurrency Usage in Various Sectors
Cryptocurrency is increasingly influencing multiple sectors in Myanmar, driven by economic instability and the need for alternative financial solutions.
Banking and Financial Services
Amid the challenges posed by political unrest, Myanmar's shadow government, the National Unity Government (NUG), launched the Spring Development Bank, the nation's first blockchain-based bank. This initiative offers financial services such as cross-border remittances and digital gold savings. It targets both domestic users and the diaspora.
The bank operates on the Polygon network, providing faster, cost-efficient transactions and addressing high remittance fees, which can reach up to 30%.
Retail and E-commerce
Businesses in Myanmar are adopting cryptocurrencies for peer-to-peer payments, particularly for cross-border transactions and e-commerce activities. Given the lack of reliable banking options, many merchants use crypto for transactions with international suppliers and customers.
Humanitarian Aid and NGOs
Some humanitarian organizations are turning to cryptocurrencies for aid distribution in Myanmar. Digital currencies circumvent traditional banking restrictions imposed by the military regime. This allows for seamless fund transfers to vulnerable communities.
“Crypto market in Myanmar is expected to reach an annual growth rate (CAGR 2024-2025) of -2.98%, resulting in a projected total revenue of US$40.2m by 2025.”
Cryptocurrency Regulation in Myanmar
As earlier mentioned, cryptocurrency trading is illegal in Myanmar, with the military government imposing a ban on its use for buying, selling, and other financial activities.
Despite this prohibition, the National Unity Government (NUG), Myanmar's opposition group, has recognized Tether (USDT) as a legal tender to counter the military regime's financial policies and facilitate secure, decentralized transactions.
Crypto regulations in Myanmar remain ambiguous. While the military regime enforces strict controls on financial transactions, there are no comprehensive frameworks to govern cryptocurrency use. This legal uncertainty discourages institutional adoption but has not stopped informal and peer-to-peer usage, particularly in remittances and grassroots economic activities.
Challenges Facing Crypto Adoption in Myanmar
Some of the challenges facing crypto adoption in Myanmar include:
- Legal Prohibition: Cryptocurrency trading is illegal under the military government. This discourages formal adoption and puts users at risk of legal penalties.
- Limited Internet Access: Restricted Internet services and frequent shutdowns hinder digital activities, including cryptocurrency transactions.
- Regulatory Uncertainty: The lack of clear and comprehensive frameworks creates an unstable environment for crypto users and businesses.
- Economic Constraints: High poverty levels and limited financial literacy reduce the accessibility of digital assets for the general population.
“Did you know that the United States currently leads the way with the highest revenue in the cryptocurrency market, reaching a staggering US$9.8bn in 2024?”
The Potential for Cryptocurrency in Myanmar
Despite the challenges, cryptocurrency holds significant potential for Myanmar, particularly in sectors like remittances, banking, and financial inclusion.
Given the limited access to traditional banking services, cryptocurrencies provide a viable alternative for people to store, send, and receive money, especially in a country where the majority of the population is unbanked.
The National Unity Government’s push to recognize Tether as a legal tender signals an opportunity to bypass the military regime's financial control. This fosters a more decentralized and resilient financial system.
Furthermore, blockchain technologies could revolutionize sectors such as agriculture, energy, and humanitarian aid by enhancing transparency and efficiency. Myanmar’s growing crypto usage, even in the face of legal and infrastructural challenges, highlights the role of digital currencies in supporting economic resilience and freedom.
Conclusion
Cryptocurrency adoption in Myanmar is a complex and evolving issue shaped by political turmoil, economic instability, and regulatory uncertainty.
While cryptocurrencies are not legally recognized and face heavy restrictions under the military government, their grassroots adoption continues to grow. This growth has been driven by the desire for financial autonomy and the need for alternatives to the local currency, the kyat.
Blockchain and digital assets present opportunities for financial inclusion, cross-border remittances, and bypassing centralized control, especially for Myanmar’s unbanked population. The National Unity Government’s recognition of Tether as a legal tender shows an effort to empower citizens and disrupt the military regime's financial grip.
Despite ongoing challenges such as legal barriers, limited infrastructure, and economic hardship, the potential for cryptocurrencies to foster economic resilience and support Myanmar's democratic efforts remains significant. It offers a beacon of hope for the future.
