VIENTIANE, May 21 (Xinhua) -- The Bank of the Lao People's Democratic Republic has warned Lao commercial banks, businesses and members of the public not to buy, sell or use cryptocurrency for money transactions as this practice is illegal.
The Lao 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 Lao central bank has banned the use of these currencies, the local daily Vientiane Times reported on Tuesday.
The department told banks and other financial institutions under the management of the Lao central bank to strictly observe the announcement, which was issued in October 2018.
A source with the Lao central bank told the daily that there is no security system in place to protect users or customers of cryptocurrency transactions.
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.
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 cryptography to secure financial transactions, control the creation of additional units, and verify the transfer of assets.
In its October announcement, the Lao central bank prohibits financial institutions from possessing, engaging in, or encouraging cryptocurrency transactions.
Banks were told to be vigilant to ensure customers not to use their accounts for cryptocurrency transactions. Customers are not permitted to use any type of bank card, including credit cards, for the purchase of cryptocurrencies.
The central bank also warned financial institutions to be aware that ill-intentioned groups might use their names and logos to advertise cryptocurrencies.