Thailand to regulate the use of cryptocurrencies for payment

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The Bank of Thailand (BOT), the Securities and Exchange Commission (SEC) and the Ministry of Finance (MOF) have jointly decided to regulate the use of cryptocurrencies as a medium of exchange. They cite threats of financial instability and criminality as the main justifications.

Rigor on crypto

BOT announced its regulatory decision in a Press release earlier today. It begins by recognizing how digital asset companies are expanding the functionality of cryptocurrencies as a medium of exchange.

Indeed, many companies, including Google and Mastercard, now allow the use of crypto at vendors that do not accept crypto directly. Meanwhile, companies like OpenNode are building bitcoin payment networks through the Lightning Network for organizations like Perth Heat.

Thai regulators interpret these developments as a shift of cryptocurrencies from “investments” to “means of exchange”. They fear it will cause financial instability.

“Using digital assets in this manner could also present additional risks to consumers and businesses due to price volatility, cyber theft, personal data leakage or money laundering, etc.” read the post.

Cryptocurrencies are indeed volatile, with Bitcoin now trading nearly 50% below its all-time high less than three months ago. However, money laundering and cyber theft are often overstated problems. A 2020 Chainalysis report indicates that cryptocurrency crime is “falling” and represents “a small part of the overall cryptocurrency economy”.

Nevertheless, regulators intend to limit the “widespread adoption” of cryptocurrencies as a means of payment. However, certain assets deemed “friendly” to the financial system will see regulatory directives issued to them. This could eventually include a CBDC, which BOT is planning a pilot project for.

Taxes in Thailand

Earlier this month, CryptoPotato reported that Thais plan to levy a 15% capital gains tax on cryptocurrency profits. However, the country’s former SEC chief opposes the move, encouraging a policy that benefits the business sector.

A report in November would back up the SEC Chairman’s claims. He showed that further adoption of cryptocurrencies could create wealthier citizens who would multiply the country’s GDP. Fortunately, access to crypto is expected to grow in the country as Binance establishes its Thailand-based exchange.

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