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The Thai Securities and Exchange Commission (SEC) is currently seeking feedback on a proposal to ban the use of cryptocurrencies as a method of payment for goods and services in the kingdom, in line with the launch of the Bank of Thailand’s programmable payments sandbox, which has been previously examined here.
How does this change things?
The proposed changes consist of two main action points:
- The SEC will first issue a ban on current licensed digital asset operators in Thailand, stopping operators from conducting any business that could be considered as facilitating a payment for goods and services using a digital asset.
- The SEC then also proposes to allow participants in the Bank of Thailand’s programmable payments sandbox to make use of digital assets (if they so choose) as part of its trials by gazetting their offerings as part of its list of approved digital assets, and therefore limiting the use of digital assets as a payment method to only those participants in the trial who choose to use them.
How does this compare?
The introduction of the crypto ban seems to be a repeat of a tried and (somewhat) tested method that a few Asian jurisdictions have used before.
As previously hypothesised, jurisdictions with varying degrees of capital controls can often ban or severely restrict the use of private cryptocurrencies as a method of payment to ensure good domestic demand for a state-sanctioned digital asset.
This was the case in China, which banned all crypto transactions in September 2021 before launching its central bank digital currency (CBDC), the digital yuan, in early 2022.
The same was true in India, which imposed a severe tax regime on cryptocurrency trading as part of its 2022 Finance Bill (see point 28) before confirming the development of the digital rupee in April 2022.
Although Thailand’s ban does not come in tandem with the launch of a CBDC, the fact remains that the SEC has imposed this ban to create a market specifically for crypto sandbox participants.
Why should you care?
If you are a crypto provider in Thailand, the implementation of this ban would essentially mean that you would have to ensure that your platform does not and cannot facilitate the use of crypto as a payment method. If you also want to have your say on this ban, then you should act fast as the SEC’s consultation closes on August 15, 2024.
If you have a crypto-based solution that fits within the parameters of the Bank of Thailand’s trial, you now have the opportunity to be one of the only crypto providers that could be allowed to provide a payment service.
If you are a crypto-based payments service provider in a country that takes a similar approach to financial regulation to Thailand, you should be on the lookout for the introduction of a CBDC or regulator sanctioned digital currency based payments trial, as this may signal the imposition of restrictions on your business, or indeed an outright ban.
