The Macau government has announced plans to incorporate digital currency as legal tender, but has not announced a specific time frame for its implementation.
The draft law on “Legal Regime for the Establishment and Issuance of Currency”, published by the Executive Council of Macau on Friday, regulates the types of legal tender in Macau, stating, “Legal tender in Macau includes not only traditional types of banknotes and coins, but also digital currency, which will be given the same status.”
As to which digital currencies can be used, or when they will be introduced, the government has set no specific time frame, but only incorporates the concept of “digital currency” into the legal tender.
There are no detailed articles in the draft, which the government will submit to the Legislative Assembly for scrutiny. There is also no information on whether such digital currency will be permitted for use in Macau’s casinos.
If digital currency can be used in casinos, it will bring significant changes to the gaming industry in Macau. This is because the government will be able to monitor financial transactions with far greater accuracy.
Veteran gaming practitioner Lam Kai Kuong believes that if digital currency is used in casinos, the trajectory of transactions between players and casinos will become clearer, making it easier for the government to regulate.
Lam cited the example of China’s digital Renminbi, which if circulated in Macau as legal tender will make the spending patterns of mainland visitors more transparent.
“How much money mainland visitors bring to Macau and how much they spend in Macau will be clearly monitored,” he said.
But for casinos, he believes it will have a negative impact because rich mainland gamblers will no longer be able to bring large amounts of money to Macau to gamble. To the contrary, if digital RMB is circulated in Macau, the mainland government will be in a better position to impose regulations on how much money mainland visitors can bring to Macau.
“The digital currency would make it easier for the government to track transactions. The exchange stores, which are mainly for cash transactions, will also be replaced,” Lam said.
China launched its digital renminbi in 2019, and although it is still in a trial phase, several first-tier cities are already able to use it.
Originally rolled out across four cities in April 2020 and another six in October of the same year, the People’s Bank of China (PBOC) announced that it was expanding the pilot program to 11 more cities from April 2022 as well as Beijing and Zhangjiakou City following the 2022 Beijing Winter Olympics.
Opinions are divided, however, on whether the introduction of digital currencies into Macau would have a positive or negative impact on the industry.
In a note published in May, Bernstein analyst Vitaly Umansky said, “If cashless gaming is adopted in Macau, China’s Digital RMB could become an essential part of the infrastructure and provide an edge to allow seamless implementation of large-scale cashless play.
“In the case of Macau, Digital RMB could potentially become a one-stop solution for both the casino and customers, dis-intermediate payment providers and simplify the process of currency and chip exchanges and eliminate any associated transaction costs.
“If Digital RMB becomes a legal tender in Macau, a mainland Chinese customer would be able to directly use Digital RMB for casino play without going through the usual process of converting RMB into HKD (Hong Kong dollars) cash and back again to RMB.
“While China’s capital controls may not be eased in the initial stages of Digital RMB introduction into Macau, in the longer term, with the transparency and traceable nature of digital RMB transactions, we see potential capital restriction relaxation as a governmental objective aimed at promoting cross-border RMB usage.”
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