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Thailand bans use of crypto for payments
Regulators worry about financial stability if binary Baht spread
Thailand's Securities and Exchange Commission (SEC) announced on Wednesday a ban on using cryptocurrencies and other digital assets as a means of making payments.
Trade in the digital currencies will continue to be permitted, but as assets only.
The ban goes into effect on April 1, but digital assets payment operators will be given a grace period through the end of the month.
A statement from the SEC said the regulatory body, along with the Bank of Thailand (BOT), saw the need to supervise and control the use of cryptos as a means of payment for goods and services to ensure stability of the financial system and the economy as a whole. According to regulators, digi-Dollars and binary Baht undergo unhelpfully volatile price fluctuations, are at risk of theft or data leaks, and may aid criminals in money laundering.
The SEC reasoned that the development of any unit of pricing outside the official currency, the Thai Baht, would increase the cost of economic activities and reduce the efficiency of monetary policy transmission.
"If there is a liquidity crisis in the country, the BOT will not be able to provide liquidity assistance to various financial institutions in forms other than Thai baht," said the SEC.
The agency also argued its incoming regulations align with those implemented in the UK, EU, South Korea and Malaysia.
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Enthusiasm for cryptocurrency in Thailand is high. The nation reportedly boasts a greater proportion of people owning the alterna-money than anywhere else in the world. The government reported in January that the value of digital assets owned by Thais was ฿114.5 billion ($3.4B).
Elsewhere, crypto goes mainstream
Meanwhile, El Salvador has taken a completely different approach. It became the first country in the world to adopt Bitcoin as legal tender last September.
The move has garnered criticism from the International Monetary Fund (IMF), while the World Bank refused to help El Salvador with implementation.
"Some countries may be tempted by a shortcut: adopting cryptoassets as national currencies. Many are indeed secure, easy to access, and cheap to transact. We believe, however, that in most cases risks and costs outweigh potential benefits," said the IMF last July, adding "Cryptoassets are unlikely to catch on in countries with stable inflation and exchange rates, and credible institutions."
The IMF cited Bitcoin's volatility as one major risk. In April 2021 it reached a peak value of $65,000 and crashed to less than half that two months later. Bloomberg calculated that the nation likely lost $20 million between when it started buying Bitcoin last year and this January.
As the price plummeted, the IMF encouraged El Salvador to ditch its crypto plans.
This week the country delayed a Bitcoin-backed bond, meant to launch last week, due to the cryptocurrency's current price fluctuations.
The Central American country's finance minister Alejandro Zelaya told local television it was ideal to go to market in the first half of the year and that after September it would be hard to raise capital in the international market. ®