Imagine trying to send money to a relative abroad, only to find that the very tool you’re using is illegal in your own country. For millions of people in Myanmar, a Southeast Asian nation with a complex political history and developing financial infrastructure, this isn’t just a hypothetical scenario-it’s daily life. The reason? A strict prohibition on cryptocurrencies enforced by the Central Bank of Myanmar (CBM), the nation's primary monetary authority responsible for issuing currency and regulating financial institutions.

The cornerstone of this prohibition is Central Bank Directive 9/2020. Issued on May 15, 2020, this directive didn’t just suggest caution; it outright banned the sale, purchase, exchange, and transfer of unregulated digital currencies. If you’ve been following the news from Southeast Asia, you might wonder why a country with such significant economic challenges would shut the door on an asset class that many see as a lifeline during inflation. The answer lies in a mix of legal authority, political instability, and the desperate attempt to control capital flight.

What Exactly Does Directive 9/2020 Prohibit?

To understand the impact, we need to look at what the directive actually says. It’s not vague. The CBM explicitly targets specific actions involving Bitcoin (BTC), the first and largest decentralized cryptocurrency by market capitalization, Ethereum (ETH), a blockchain platform enabling smart contracts and decentralized applications, Litecoin (LTC), a peer-to-peer cryptocurrency created as a lighter version of Bitcoin, and even Perfect Money, an online payment system often used for digital transactions.

The directive relies on two key sections of the Central Bank of Myanmar Law, the legislative framework granting the CBM exclusive authority over currency issuance: Section 40(e) and Section 62. These sections establish the CBM as the sole entity authorized to issue and administer local currency. By defining cryptocurrencies as "unregulated digital currencies" rather than legal tender, the CBM asserts that any transaction involving them bypasses their legal monopoly.

Here is what is strictly forbidden under this directive:

• Selling or purchasing cryptocurrencies.
• Exchanging one cryptocurrency for another or for fiat currency like the Kyat.
• Transferring digital assets between individuals or entities within Myanmar.
• Using personal Facebook accounts or web pages to facilitate these trades.
• Financial institutions providing services related to cryptocurrency transactions.

Before 2020, the CBM had warned citizens that trading digital currencies was done at their own risk. But Directive 9/2020 marked a shift from warning to active enforcement. It wasn’t just about theory anymore; it was about policing behavior.

Why Did Myanmar Ban Cryptocurrency?

You might ask, why go so hard against crypto? Especially when the official currency, the Kyat, the official currency of Myanmar, which has experienced significant volatility and depreciation, was already struggling. The reasons are multifaceted, rooted in both economics and politics.

First, there’s the issue of capital controls. Myanmar has long struggled with managing its foreign exchange reserves. When people buy stablecoins like Tether (USDT), a cryptocurrency pegged to the value of the US dollar to maintain price stability, they are effectively moving wealth out of the traditional banking system. This makes it harder for the central bank to monitor where money is going and whether it’s leaving the country illegally.

Second, the timing matters. The directive was issued in May 2020, less than a year before the military coup in February 2021. In hindsight, it looks like a preemptive move to tighten financial grip before the political situation deteriorated further. The government feared that cryptocurrencies could be used to fund opposition activities or evade sanctions, although those fears became more pronounced after the coup.

Third, there’s the legal framework. The ban operates under the Foreign Exchange Management Law, legislation governing cross-border financial transactions and currency conversion in Myanmar, the Financial Institutions Law, regulations overseeing banks and other financial service providers, and the Anti-Money Laundering Law, legal measures designed to prevent illicit funds from being legitimized through financial systems. Together, these laws give the CBM teeth. They can freeze accounts, impose fines, and even pursue imprisonment for violations.

Enforcement: From Warnings to Action

A ban on paper means little without enforcement. And here, the CBM has shown it’s serious. On May 24, 2024-exactly four years after the original directive-the CBM issued another public notice. This wasn’t just a reminder; it was a threat. The bank stated it was ready to close bank accounts and initiate legal proceedings against violators.

Who are they targeting? Primarily domestic currency converters and operators involved in unauthorized Hundi, an informal value transfer system common in South and Southeast Asia for remittances money transfers using USDT. Hundi networks have historically been used to move money across borders outside the formal banking system. By combining Hundi with Tether, users could bypass capital controls entirely. The CBM sees this as a direct challenge to its authority.

Legal firm Tilleke & Gibbins, a prominent regional law firm providing legal services in Southeast Asia notes that while overseas operators haven’t faced action yet, persons engaged in transactions within Myanmar should be aware of possible repercussions. Accounts have been frozen. Legal cases have been filed. The message is clear: if you get caught, you pay the price.

However, enforcement is selective. The CBM focuses on social media platforms like Facebook and traditional banking channels. Why? Because that’s where they can monitor activity. They struggle to track offshore exchanges or encrypted messaging apps like Telegram, where much of the current trading happens.

The Underground Economy: How People Still Use Crypto

If the ban is so strict, why do people still use crypto? Simple: necessity. Following the 2021 coup, the kyat collapsed. Inflation soared. Capital controls tightened. For ordinary citizens, saving in kyats meant watching their wealth evaporate. Sending money abroad became nearly impossible through official channels. Enter cryptocurrency.

According to analysis by Coinfomania, the period between 2024 and 2025 saw tremendous growth in peer-to-peer (P2P) transactions conducted through Telegram and offshore exchanges. Stablecoins, especially USDT on the Tron Network, a blockchain platform known for high throughput and low transaction fees, dominate informal international payments. Why Tron? Because it’s fast and cheap. You don’t want to lose half your remittance in gas fees when you’re sending $50 home.

This underground economy serves several purposes:

• Remittances: Workers abroad send money home via P2P platforms, avoiding high bank fees and delays.
• Savings: Citizens hold USDT as a store of value, protecting themselves from kyat depreciation.
• Financing Resistance: Some funds are directed toward opposition groups, though this is risky and heavily monitored.

The technical challenges are real. Internet connectivity in Myanmar is fragile. The military government frequently imposes internet shutdowns, particularly during protests or elections. These blackouts disrupt cryptocurrency activities, making it hard to check balances or complete transactions. Yet, despite these hurdles, demand persists. People find ways around the blocks, using VPNs, mobile data, and offline wallets.

Political Fragmentation: Two Governments, Two Policies

Here’s where things get complicated. Myanmar doesn’t have one unified government anymore. Since the 2021 coup, the country has been split between the military-led State Administration Council (SAC) and the opposition National Unity Government (NUG).

The SAC enforces the crypto ban. But the NUG? They did something radical. In December 2021, the NUG declared Tether (USDT) as legal tender in regions under its control. Yes, you read that right. While the military bans crypto, the opposition embraces it. This creates a bizarre dualistic approach. In some areas, holding USDT is a crime. In others, it’s accepted for paying taxes and buying goods.

The NUG has even announced plans to launch its own cryptocurrency called DMMK (Digital Myanmar Kyats), a proposed digital currency by the National Unity Government to support parallel economic structures and developed a user-friendly mobile wallet. This directly challenges the military’s prohibition. It’s not just about finance; it’s about legitimacy. By creating an alternative financial system, the NUG aims to undermine the SAC’s control.

In response, the SAC drafted cybersecurity laws in January 2022 to criminalize cryptocurrency use. It’s a cat-and-mouse game played with billions of dollars at stake.

How Does Myanmar Compare to Its Neighbors?

If you look at the rest of Southeast Asia, Myanmar stands out as an outlier. Most neighboring countries have moved toward regulation rather than prohibition.

While Thailand and Singapore have built robust frameworks for cryptocurrency trading, Myanmar maintains a complete prohibition. Even Vietnam, which bans trading, encourages blockchain innovation. Myanmar’s approach is uniquely restrictive, driven by its unique political context.

Challenges and Future Outlook

So, is the ban working? Not really. Academic research from Chiang Mai University’s School of Public Policy suggests that Myanmar’s crypto policy landscape remains in an early stage with a lack of sound policy implementations. The fundamental challenge is that cryptocurrency adoption requires reliable internet connectivity, which has been severely compromised by consecutive internet shutdowns imposed by the military government.

Yet, the ban hasn’t eliminated usage. It’s driven it underground. A parallel economy now exists, operating outside traditional financial institutions. Industry analysts note that the collapse of the kyat has intensified demand for alternative stores of value. USDT has become particularly popular for its stability and ease of cross-border transfer.

Looking ahead, future policy developments remain uncertain. Will the CBM escalate enforcement? Or will they eventually accommodate reality and regulate instead of ban? It depends on political developments and regional trends. If the military retains power, expect continued crackdowns. If the opposition gains ground, we might see a shift toward legalization, mirroring the NUG’s current stance.

For now, the situation is precarious. Users navigate a gray zone, balancing the need for financial freedom against the risk of legal repercussions. The CBM watches. The people adapt. And the world waits to see which way the wind blows.