Will the policy affect crypto adoption in Thailand? The days ahead will tell.
Amid a boom in mainstream adoption of crypto, the SEC of Thailand and the Bank of Thailand have announced the ban on crypto payments. In a joint statement released by the two financial watchdogs, all business operators that accept crypto payments must stop doing so, with effect from April 1st.
In January, the authorities had previously stressed the need to balance the potential benefits of cryptocurrency adoption with its pitfalls. Back then, BOT Governor Sethaput Suthiwartnarueput highlighted the need for close supervision of any such activity. Now, it has outrightly proposed a ban on the use of crypto for payments.
In line with the ban, cryptocurrency operators are expected to stop advertising, soliciting or establishing a system to facilitate payment. Instead, they are mandated to warn clients about using digital assets for payments. According to the proposed ban, non-compliance with the rules will attract a service cancellation or temporary suspension.
The ban on cryptocurrency for payments comes even as money laundering concerns have increased in the nation. Other risks cited include value loss caused by price volatility, cyber theft and privacy concerns. The joint statement concluded that crypto payments could upset the stability of the financial and economic system and pose risks to people and businesses.
The hardest hit by this new law will be the local domestic developers. In 2021, these developers embraced crypto payments as a way to revitalize the condominium market.
Ban on Crypto Payments, Not on Crypto Trading
Despite the ban, the SEC stressed that it had nothing to do with the trading of digital assets. In line with this, the authorities reduced the tax burdens on crypto investors. Among other things, the regulator announced a 7% tax exemption on crypto trading on government-approved exchanges. The exemption will continue from April 2022 to April 2023.
Likewise, the SEC proposed a rule mandating crypto businesses to disclose their service quality and IT usage information.
A Chainalysis report suggests that Thai users hold more than $3 billion worth of cryptocurrencies currently. Likewise, transaction volume increased by about 600% from November 2020 to April 2021. Again, reports suggest while 1 in 10 working-age internet users owned some form of “crypto” worldwide, the figure is greater than 2 in 10 in Thailand.
Will the policy affect crypto adoption in Thailand? The days ahead will tell.
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