In the Southeast Asian country of Myanmar, the exiled government is betting on cryptocurrency to help it overthrow a military junta as it backs the Saturday launch of the nation’s first crypto-based bank.
The National Unity Government (NUG) was formed in exile after a February 2021 military coup d’état that resulted in the imprisonment of state counsellor and Nobel laureate Aung San Suu Kyi. In the two years since the ousting, Myanmar has been engaged in a civil war between resistance groups and the junta.
The NUG is recognized by the European Parliament and the UN commissioner for human rights has recently called for junta rule to end. The US Burma Act solidifies the stance of the US by allowing the State Department to engage with the NUG and place sanctions against the junta, also known as the State Administration Council (SAC). Canada and the UK also have sanctions in place against the SAC.
Meanwhile, Russia, China, India, Pakistan, Bangladesh, Vietnam, Laos and Thailand are among those that recognize the junta as the official government of Myanmar.
While revolutions may not be televised, they certainly must be funded. This leaves the NUG reliant on a mix of crowdfunding techniques including international donations, selling bonds, real estate auctions and more. Last year the NUG even launched its own digital currency, complete with mobile wallet NUGPay.
In January, NUG minister for planning, finance and investment Tin Tun Naing said his party had raised over $100 million to date, 45 percent coming from non-interest earning bonds. It also has collected over $1.4 million in taxes from the 38 townships the resistance group controls, out of a total of 330.
And following a soft launch on July 22, the new crypto-only Spring Development Bank (SDB) will provide a way for movement of funds outside the eyes of the junta.
Naing said in a press conference on Thursday that the junta had used access to bank transfers in the past as a way to “hunt down and persecute.”
“NUGPay is the main method we’ve facilitated payments in a way that escapes control of military junta,” said NUG Deputy Minister of Planning, Finance and Investment Min Zayar Oo. “Similarly Spring Development Bank is an expansion of our ability to provide services to people in the country in a manner avoiding and out of control of military junta.”
While not owned by the NUG, SDB’s launch comes with the group’s support. It is blockchain-based and uses the Polygon Network as it tokenizes real-life assets. It is licensed and regulated by Interim Central Bank of Myanmar, which was set up by the NUG last month.
The soft launch takes on 1,000 private beta users with 100 relationship managers on hand to assist.
In August, SDB expects to launch fully into Phase 1 when it will take deposits in four currencies – Myanmar Kyat, US Dollars, Singapore Dollars and Thai Baht – from customers anywhere in the world. The bank expects to provide currency exchange, account transfers, cross-country remittances, digital gold savings and removal of cash via relationship managers, crypto or card.
“We also will have additional services price linked to savings services, and beyond that tie it to allow online purchases for revolution products, such as energy bonds and other products,” said the image-less bank CEO, who simply goes by “Calvin T” for safety reasons.
Phase 2 will expand to four additional currencies: British Pounds, the Euro, Korean Wong and Japanese Yen. The bank will also expand its merchant payments, add digital debit cards, and facilitate swift links and corresponding accounts with other banks.
In Phase 3, the NUG will be able to disburse amounts to ministries and related departments, as well as have secondary marketplaces for End of Dictatorship (EoD) investments and third-party services like insurance and an e-lottery.
After six months, the bank targets having 100,000 active users. The goal for the following six months is 500,000.
Customers, Niang said, will only have as much identifying information collected as necessary. “We are shielded from personal information of our users/customers. This is how we have securitized different programs.”
The NUG and SDB want the world to know it’s a very real bank, so much so that its tagline is “Real bank. Real freedom.”
“To summarize, the real objective of SDB is to deliver freedom and democracy for 55 million citizens of Myanmar through disruption of the financial system controlled by the SAC, through funding revolution, thirdly through deploying funds and revenue generated via most efficient routes, and to support the rebuilding of the post-revolution Myanmar,” said Naing.
There are some concerns around the NUG plan. It’s hard to see how the bank will possibly engage in any useful know-your-customer efforts while keeping to the promise to shield identities. There is also the question as to whether it has the funds to back it up.
The US Federal Reserve Bank of New York froze around $1 billion of Myanmar government reserves when the SAC attempted to move it days after seizing power back in 2021.
The NUG has long sought to unfreeze and recover the money to support their digital currency.
On Thursday, Niang said the NUG was still engaging the US government on the release of the funds, which still hasn’t happened.
“What I can say is that any such decision from the US government and US Federal Reserve will only come about when they see the chances or probability of success of revolution is on our side,” he added.
Niang said even if the US approved the release of funds to the NUG, without infrastructure it couldn’t deploy the funds.
“And this is why we have established Spring Development Bank and the Interim Central Bank of Myanmar – to create financial infrastructure for when those funds can be released,” added Niang. ®
