LAOS has issued new regulations to govern cryptocurrency mining operations and trading platforms in the country.
The new regulations specify the types of businesses that can be operated and how it can be used, including digital asset transactions in the country to ensure that they are safe, reliable, and efficient.
The Laotian Times reports that according to a notice issued by Minister of Technology and Communications, Dr Boviengkham Vongdara, the new regulations were aimed at protecting the legitimate rights and interests of both operators and users.
Companies involved in mining or operating cryptocurrency trade platforms are now required to be wholly Lao-owned with stable financial status.
They must also have sufficient capital to operate a cryptocurrency trading business.
In addition, a security deposit of US$5 million must be deposited with the Bank of Laos by any company applying to mine or act as a platform to trade in cryptocurrency.
The regulations were issued after the government previously authorised six companies to carry out trial mining and trading cryptocurrencies such as Bitcoin, Ethereum, and Litecoin.
Under the new regulations, cryptocurrency mining operations must use no less than 10 megawatts of electricity, with 115kV or 230 kV of power provided under a six year extendable contract.
To encourage cryptocurrency mining, the government will also exempt electricity transmission fees and import taxes for Electricite du Laos, the national power generation company.
The notice further said that cryptocurrency mine operators need to pay taxes in a lump sum and it will be determined by the amount of power used, with US$1 million payable for every 10 megawatts used.
Meanwhile, cryptocurrency trading platforms will be charged a one-time fee of US$1 million for a cryptocurrency trading license.
Cryptocurrency trading enterprises will also need to pay tax at a rate of 15 per cent from the fee earned from buyers and sellers.
According to the report, the Ministry of Energy and Mines will need to ensure that enough energy is available to meet public electricity needs and crypto miners will get lower electricity tariffs during the rainy season.
Laos is also looking at the possibility of having its own digital currency, following the move to allow the six companies to mine and trade in cryptocurrency.
In October, the Bank of the Lao People's Democratic Republic, had signed a Memorandum of Understanding with the Japan International Cooperation Agency on the possibility of developing a digital version of the Laos currency kip.
The central bank is working with Tokyo-based fintech company Soramitsu on the digital currency.
A Nikkei Asia report had said Laos is seen as trying to extend the reach of its currency as a digital Chinese yuan looms as a potentially powerful presence in the country.
Under the MoU, Soramitsu is expected to assess the role of banks and other intermediaries and the country's needs for financial inclusiveness, among other areas.
These moves come as China prepares to launch a digital version of its currency as early as next year.
While the digital yuan is likely to be a force only within China's borders in the early stages, the currency is expected to move beyond its shores later.