Myanmar Crypto Ban: How Central Bank Directive 9/2020 Crushed Digital Currency Use - And Why It Failed

On May 15, 2020, Myanmar’s Central Bank dropped a bomb: Central Bank Directive 9/2020. It didn’t just warn people away from Bitcoin or Ethereum. It made every kind of cryptocurrency transaction illegal - full stop. Buy, sell, exchange, transfer? All banned. The message was clear: if you touch digital currency in Myanmar, you’re breaking the law.

The directive didn’t come out of nowhere. The Central Bank of Myanmar (CBM) pointed to its legal authority under Section 40(e) and Section 62 of the Central Bank of Myanmar Law. Only the CBM could issue currency. Anything else? Illegal. Bitcoin, Litecoin, Ethereum, Perfect Money - all named outright. But the real target was hidden in plain sight: Tether (USDT). That’s the stablecoin people were already using to move money across borders, pay for imports, or send cash home to families. The CBM didn’t just ban crypto. They banned the only thing keeping ordinary people from financial collapse.

Before 2020, the CBM had said crypto was risky. No enforcement. Just warnings. But Directive 9/2020 changed everything. Banks were ordered to freeze accounts linked to crypto activity. People who traded on Facebook pages or used online wallets faced legal action. The Anti-Money Laundering Law and Financial Institutions Law became tools to punish anyone caught moving digital money. Fines. Jail time. Both. The message wasn’t just legal - it was terrifying.

But here’s the twist: the ban didn’t stop crypto. It made it stronger.

By early 2021, Myanmar’s economy was crumbling. The military seized power in February. The kyat, the national currency, began a freefall. Inflation hit 100% in some areas. People couldn’t pay for food, medicine, or fuel. Banks stopped giving out cash. Foreign remittances dried up. And that’s when USDT became the new kyat.

People didn’t need a bank. They didn’t need a passport. They needed a phone and a Telegram group. Peer-to-peer trades exploded. Sellers posted rates in local Facebook groups. Buyers sent kyat via mobile money apps like Wave Money. In return, they got USDT on the Tron network - fast, cheap, and untraceable. The CBM could shut down bank accounts. They couldn’t shut down a phone.

By 2024, the underground crypto economy was bigger than ever. Coinfomania’s data showed over 70% of informal cross-border payments in Myanmar now flowed through USDT. Even people who never cared about Bitcoin before were using it just to survive. A mother in Mandalay sent money to her daughter in Thailand. A shopkeeper in Yangon bought rice from China. A doctor in Kayin State paid for medicine. All through crypto. No government oversight. No paperwork. No waiting weeks for a wire transfer.

And then came the opposition.

In the regions controlled by the National Unity Government (NUG), things got even wilder. In December 2021, they declared USDT legal tender. Not just tolerated - official. They even started building their own digital wallet and planned to launch DMMK, a state-backed digital kyat. The military government responded by drafting new cybersecurity laws in January 2022 that made crypto use a criminal offense. Two governments. Two currencies. One country split in half.

Meanwhile, the CBM kept issuing warnings. On May 24, 2024 - exactly four years after the original ban - they released another notice. Same threats. Same penalties. Same empty promises. But the enforcement was selective. They closed a few bank accounts. Arrested a handful of hundi traders. But they didn’t touch the Telegram groups. Didn’t shut down offshore exchanges. Couldn’t track Tron-based USDT transfers. The law existed on paper. In real life, it was a ghost.

And the internet? The military shut it down for days at a time - in Rakhine, Chin, and Karen states - to stop protests. But those same shutdowns made crypto harder to use. People in those areas had no way to check prices or send funds. So they waited. They saved cash. They bartered. They adapted. The ban didn’t stop crypto. It just made life harder for the poorest.

Compare this to Thailand or Singapore. Both countries built rules around crypto. Licensing. Taxes. KYC. Regulation. Myanmar chose destruction. No framework. No education. Just force. And it backfired. The CBM didn’t eliminate crypto. It created a black market that’s now the backbone of daily survival for millions.

Legal experts from Tilleke & Gibbins say overseas crypto firms aren’t being targeted. Only those inside Myanmar who move money through local channels. But even that’s getting harder. More people use peer-to-peer apps. More trades happen in encrypted chats. More transactions skip banks entirely. The CBM’s tools - bank freezes, social media monitoring - are useless against decentralized networks.

And here’s the brutal truth: the kyat isn’t coming back. Even if the military wins the war, the currency is broken. People lost trust. They won’t go back to cash they can’t trust. Crypto isn’t a trend here. It’s a lifeline.

Some say the ban will eventually loosen. Maybe. But not because the CBM changed its mind. It’ll change because the people forced it to. When 10 million people use USDT to feed their families, no government can ban it forever. The real question isn’t whether the ban will end. It’s how many more people will suffer before it does.