Myanmar, a contested country in Southeast Asia, has a turbulent political history. Now cryptocurrency is playing a role in shaping the country’s political future. Myanmar’s National Unity Government, led by supporters of the ousted and imprisoned leader Aung San Suu Kyi, has recognized tether as its official currency.
The NUG Finance Minister Tin Tun Naing said in a Facebook post on Sunday that the NUG would “accept Tether for domestic use” to simplify and expedite current trading, service and payment systems, “it said in a Bloomberg report.
Tether is a stablecoin whose value is pegged to the dollar. This means that the price of tether doesn’t fluctuate as much as volatile cryptocurrencies like Bitcoin or Ethereum and that each tether can be exchanged for a dollar – which makes it more suitable for payments. However, there is controversy over whether Tether is fully covered by reserves.
While Tether has repeatedly claimed that its coins are fully backed by cash and the like, the company settled $ 18.5 million with the New York State Attorney General earlier this year without admitting any wrongdoing. As part of the settlement, Tether will be banned from doing business in New York State.
In October, an investigation by a Bloomberg journalist found that Tether – whose reserves include commercial paper – has loaned large Chinese corporations and other crypto firms and may risk a bank run if investments fail. That same month, the US Commodity Futures Trading Commission fined Tether $ 41 million for making misleading claims about its reserves.
It is important to note that the NUG is a shadow government that does not control any territory or hold any positions of power in Myanmar. Therefore, the NUG’s acceptance of tether is not synonymous with Myanmar accepting tether as legal tender.
To understand how this works, it is important to understand the country’s political history. Myanmar, formerly known as Burma, was under military rule for almost half a century from 1962 to 2011. The military junta that ruled Myanmar suddenly disbanded in 2011 and a civil parliament was set up for the transitional period.
In 2015, the country saw the first multi-party elections in decades, in which Suu Kyi, daughter of the independence hero General Aung San, became the de facto leader. But the military continued to provide considerable power across a number of areas.
In 2020, Myanmar had its second election, in which Suu Kyi’s National League for Democracy party won a landslide. The military backing the opposition alleged fraud, but the country’s electoral commission rejected the allegations. Tatmadaw, the Myanmar military, staged a coup, seized power and declared a year-long state of emergency in the country.
To date, Suu Kyi has been detained in an undisclosed location and faces a variety of charges, including violating the country’s official secrecy law, possessing illegal walkie-talkies, and disclosing information that could “create fear or alarm”. The Bundeswehr has also placed several NLD party members under house arrest since the coup.
The coup drew heavy criticism and protests, in which hundreds were killed. In September, the NUG, allied with Suu Kyi, declared war on the military junta. The NUG is trying to raise $ 1 billion to fund this war – which the junta claims violates counterterrorism laws – and has begun accepting Tether as part of the fundraiser.
The NUG seeks to raise funds by selling Spring Revolution Special Treasury Bonds, which are designed as a direct loan instrument. The bonds raised $ 9.5 million in the first 24 hours after the sale, but there is no information on how much has been raised to date.
Plus, adopting Tether is also a direct violation of military rule. The country and the Bank of Myanmar, the country’s central bank, banned cryptocurrencies last May. Tether, the world’s largest stablecoin by market cap, has become a tool for Myanmar’s shadow government to fight back against military rule.
In addition, like any cryptocurrency, Tether cannot be blocked by governments and the peer-to-peer transfer system offers more privacy compared to fiat currency. Hence, it would be difficult for the junta to track and prevent tether transfers to NUG, which would allow the revolution to flourish.
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