Thailand’s Securities and Exchange Commission (SEC) on Wednesday announced a ban on the use of cryptocurrencies and other digital assets as means of payment.
Trading in digital currencies will continue to be permitted, but only as assets.
The ban comes into effect on April 1, but digital asset payment operators will be given a grace period until the end of the month.
A declaration of the SEC said that the regulator, along with the Bank of Thailand (BOT), saw the need to oversee and control the use of cryptos as a means of payment for goods and services to ensure the stability of the financial system and the economy as a whole. Regulators say digi-dollars and binary baht experience unnecessarily volatile price swings, are at risk of being stolen or leaking data, and can help criminals launder money.
The SEC believed that the development of any pricing unit outside of the official currency, the Thai baht, would increase the cost of doing business and reduce the effectiveness 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,” the SEC said.
The agency also argued that its incoming regulations align with those implemented in the UK, EU, South Korea and Malaysia.
The cryptocurrency craze in Thailand is high. The nation would have has a higher proportion of people with Alterna Money than anywhere else in the world. The government announced in January that the value of digital assets held by Thais was ฿114.5 billion ($3.4 billion).
Elsewhere, crypto is going mainstream
Meanwhile, El Salvador took a completely different approach. It became the first country in the world to adopt Bitcoin as legal tender last September.
The move drew criticism from the International Monetary Fund (IMF), while the World Bank refuse to assist El Salvador in implementation.
“Some countries may be tempted by a shortcut: adopting crypto-assets as national currencies. Many are indeed safe, easy to access and cheap to trade. We believe, however, that in most cases the risks and costs outweigh the potential benefits”, noted the IMF last July, adding that “cryptoassets are unlikely to spread in countries where inflation and exchange rates are stable and institutions are credible.”
The IMF cited Bitcoin’s volatility as a major risk. In April 2021, it peaked in value at $65,000 and crashed to less than half two months later. Bloomberg calculated that the nation probably lost $20 million between when it started buying Bitcoin last year and this January.
As the price crashed, the IMF encouraged El Salvador to drop its crypto plans.
This week, the country delayed a Bitcoin-backed bond, which was supposed to launch last week, due to current fluctuations in the cryptocurrency’s prices.
The Central American country’s finance minister, Alejandro Zelaya Recount local television, it was ideal to go to the market in the first half of the year and after September it would be difficult to raise capital in the international market. ®
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