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The Bank of Thailand has released a strong notice against a privately issued stablecoin pegged to the Thai Baht, the country’s official currency.
According to a March 18 Bangkok Post story, the central bank has informed people that Thai Baht Digital (THT) has no legal guarantees or security and that users could be subject to cyber fraud or money laundering.
Pruettipong Srimachand, the central bank’s assistant governor of the legal group, claimed that all actions concerning the stablecoin are unconstitutional, citing a sixty-year-old law:
“The creation, issuance, usage or circulation of any material or token for money is a violation of Section 9 of the Currency Act 1958.”
The stablecoin is issued on the Terra website, which has also created other stablecoins such as TerraUSD, which was first issued in September 2020, and TerraKRW. It is also the business behind the Chai payments app, an e-commerce wallet operated by stablecoins that is popular in Asia.
The THT is pegged to the Thai Baht, prompting concerns that it will fragment the Thai currency structure if it attempts to trade with the central bank-issued currency. Mr Pruettipong went on to say:
“Such usage would ultimately affect the general public’s confidence in the stability of the national currency system, which is the cornerstone of all economic activities.”
Terra was established in South Korea in 2018, with $32 million in funding from Binance and Polychain. Terraform Labs, the company behind the platform, raised $25 million in a new investment round in January 2021 from Galaxy Digital, Coinbase Ventures, and Pantera Capital, among others.
Thailand’s military-backed government has taken a position similar to China’s, stating that only central bank-issued digital currencies would be legally accepted. China has accelerated its CBDC release programme, with further infrastructure testing planned before the launch, which will coincide with the 2022 Winter Olympics in Beijing.
The Bank of Thailand has also expanded its own study into a national CBDC, announcing on February 23 a collaborative effort with the Hong Kong Monetary Authority, the Central Bank of the United Arab Emirates, and the People’s Bank of China’s Digital Currency Institute.