Laos partners with Soramitsu in CBDC research as regulated crypto mining begins

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Laos has become the latest country to begin exploring central bank digital currency (CBDC), as it announced upcoming research on the topic in partnership with Japanese distributed ledger technology (DLT) company Soramitsu.

According to an October 3 report from Nikkei Asia, the project is expected to start this month following the signing of a Memorandum of Understanding between the Central Bank of Laos and the Japan International Cooperation Agency to study CBDC development.

The study will assess the operations of banks and other financial intermediaries within the financial system, as well as assess the broader transaction needs of the Laotian public.

The report notes that the CBD would provide Laotian policymakers with better economic data, and could pave the way for cross-border central bank digital currency-based settlements with its neighbor and second-largest trading partner, China.

Soramitsu worked with Cambodia to develop the Bakong Digital Payment System, a DLT-based payments network designed to reduce the country’s dependence on the US dollar for domestic trade.

The Bakong app has been downloaded nearly 200,000 times since its launch in October 2020 and is currently supported by nearly 2,000 stores.

The Lao government’s move to research digital currencies for central banks appears to have come amid a push to explore more lax regulation of digital assets.

On September 11, the administration formally approved a public-private pilot program to explore cryptocurrency mining and trading in an effort to capitalize on China’s latest crackdown on the mining sector and the resulting exodus of industrial-scale miners.

Six companies, including banks and construction companies, have been granted permission to mine crypto assets as part of the project.

Related: Cryptocurrency Transactions Increase 706% in Asia as Institutional Adoption Grows – Behavior Analysis

Several government ministries, led by the Ministry of Technology and Communications in partnership with the Bank of Laos and the National Energy Utility Electricite du Laos, have also begun work on drafting regulations governing the use of digital assets in Laos.

However, the country’s central bank issued a notice warning the public about the risks associated with unregulated crypto assets including Bitcoin and Ethereum.