The proliferation of cryptocurrencies in recent years has driven many countries to tighten rules, whilst others have tried to outright ban the asset class. Thailand is one of the former nations, with the country considering the benefits and drawbacks of cryptos and stablecoins in recent months.
The Bank of Thailand [BoT], for example, issued a warning to its residents yesterday that Thai Baht Digital [THT], a baht-pegged stablecoin issued by the South Korean firm Terra, lacked legal guarantees and security. It made headlines again today after the central bank said that the stablecoin had breached the country’s currency act, as per reports.
In fact, reports also revealed that Thailand will be looking to regulate asset-backed stablecoins in 2021. The Central Bank’s Assistant Governor Siritida Panomwon Na Ayudhya said,
“The central bank is receiving opinions from market regulators and participants before announcing regulations.”
Foreign currency-backed stablecoins, asset-backed stablecoins, and algorithmic stablecoins that are not illegal would be governed by the BoT. Around the same time, these rules would not apply to those that do not have an asset backing, such as Bitcoin or Ethereum. The Assistant Governor also noted that consumers must carry their own risk when engaging in such cryptocurrencies.
Service providers selling a baht-backed stablecoin will need to obtain permission from the central bank because they could be labelled as electronic money [e-Money], and it is the BoT’s job to monitor risks associated with e-money, such as settlement and money laundering.
Meanwhile, the central bank has partnered with several organisations, including the Hong Kong Monetary Authority, the Central Bank of the United Arab Emirates, and the People’s Bank of China’s Digital Currency Institute, on a central bank digital currency prototype based on distributed ledger technology. The CBDC, dubbed m-CBDC [Multiple Central Bank Digital Currency], aims to simplify payments, especially cross-border transactions.
The central bank has released a 29-page paper on its CBDC trials just a week ago. It emphasises the development of a proof of concept [PoC] to allow corporates to make payments in digital baht. However, it concluded that, while the overall trial revealed possible advantages, efficiency is an issue, and the technology is not yet ready for live production.
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