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Friday, July 19, 2024

Bank of the Lao PDR Suspends Loans for Cryptocurrency Businesses

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The central bank of Laos has issued a notice suspending loans to cryptocurrency business  from January this year.

The notice issued by the Bank of the Lao PDR states that the suspension was put in place to reduce financial risk and maintain the financial stability of commercial banks as well as promote the supply of credit to the production sector.

Commercial Bank Supervision Department under the central bank will discontinue the consideration of approval for cryptocurrency mining and activities related to cryptocurrencies or similar digital assets.

Cryptocurrency businesses that have already signed loan agreements with commercial banks must review the loan statement each month in detail and reevaluate the value of the collateral in accordance with the market value.

According to the New York Times, the cryptocurrency lost its credibility after Sam Bankman-Fried, CEO of one of the largest cryptocurrency exchanges, FTX Trading, declared bankruptcy after the misappropriation of funds at around USD 8 billion.

The government of Laos authorized the first six companies to trade and mine cryptocurrencies in September 2021 while relevant ministries were told to draft regulations governing the use of cryptocurrencies.

The regulations specify the types of businesses that can be operated and measures for their use, including digital asset transactions in the country to ensure that they are safe, reliable, and efficient.

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