Thailand issues regulations on digital currency management

 Thailand issues regulations on digital currency management

Cryptocurrencies in Thailand will not be used for payments, but only traded as assets on licensed platforms.

Thailand's central bank (BoT) says it is drafting regulations to prevent Bitcoin and other digital currencies from being used for payments. The agency considers their volatility to create risks and losses for both buyers and sellers.

Those found to be in violation of the regulations, whether buyers or sellers, will be fined 300,000 baht ($9,000), plus 10,000 baht for each day they continue to break the rules.

It is expected that the new regulation will be implemented in the second half of February, after the end of the public hearing that will take place on February 8. Thailand's move is expected to curb the boom of the country's cryptocurrency market at a time when the price of Bitcoin has plummeted.

A restaurant in Nakhon Ratchasima, Thailand has a counter advertising and updating Bitcoin price movements. Photo: Reuters

A restaurant in Nakhon Ratchasima, Thailand has a counter advertising and updating Bitcoin price movements. Photo: Reuters

In December 2021, the BoT warned that commercial banks should not directly engage in digital asset trading because of the high risk of price volatility. However, the BoT and the Securities and Exchange Commission (SEC) allow the trading and exchange of cryptocurrencies on trading platforms that have been licensed by the SEC.

There are eight SEC-licensed cryptocurrency exchange platforms, including Bitkub, Thailand's largest. Siam Commercial Bank (SCB), the kingdom's oldest lender, invested 17.85 billion baht to buy a 51 percent controlling stake in the platform last November.

Nares Laopannarai, General Secretary of the Digital Asset Association of Thailand, said that the latest announcement from the BoT has put major companies under pressure, including those that have announced large investments in digital asset trading. cryptocurrency mining - especially at a time when the price of Bitcoin has plummeted.

According to him, some companies that have just announced they accept payments in digital currencies - such as retailer The Mall Group, along with real estate developers such as Sansiri and Ananda - can cope with the new regulation. Instantly with minimal impact. But the big companies that have invested in Bitcoin mining will have more problems.

For example, Brooker Group, a real estate and financial advisor, invested 1.2 billion baht ($36 million) in a Bitcoin business and spent another 70 million baht on cryptocurrency mining.

Or like Jasmine Technology Solution spent about 3.3 billion baht buying 1,200 Bitcoin miners from Bitmain Technologies (China). They also have another 5,100 machines ordered for this year as they transition from the telecommunications business to crypto.

Gulf Energy has also dived into another big deal when it partnered with Binance, one of the world's largest cryptocurrency exchanges, to create a cryptocurrency trading platform that competes with Bitkub in Thailand.

"We cannot avoid the BoT move because the central bank has a regulatory mandate to mitigate risks and maintain the country's financial stability," said Terdsak Thaweethiratham, an analyst at Asia Plus Securities. essay. According to him, the upcoming disruptions in the application of blockchain and Bitcoin are therefore also inevitable. However, he hopes the new regulations are likely to be flexible and fair for all market participants.

Other members of the Association of Southeast Asian Nations (ASEAN), including Brunei, Indonesia and Malaysia, have also announced similar regulations governing cryptocurrencies in recent years. Even in some countries where Bitcoin is popular, such as Singapore and Vietnam, central banks do not allow payments in digital currency.