(Bloomberg) -- Thailand is limiting the use of digital assets for payments of products and services on concern they could endanger the country’s financial and economic systems.
Regulators plan to use legal frameworks to control the widespread adoption of digital assets for settling transactions, the Bank of Thailand, Securities and Exchange Commission of Thailand and Ministry of Finance said in a joint statement on Tuesday. Authorities said they must balance the benefits, including the technologies they bring, with the potential hazards.
“At present, widespread adoption of digital assets as a means of payment for goods and services poses risks to the country’s economic and financial system,” BOT Governor Sethaput Suthiwartnarueput said in a statement Tuesday. “Therefore, clear supervision of such activity is needed.”
Bitcoin, the most-used cryptocurrency has lost about half its value from an all-time high. The selloff comes at a vulnerable time for the industry as Russia’s central bank has proposed a ban on miners -- meaning about 15% of all Bitcoin mining power may need to relocate, by some estimates -- and while the sector was able to bounce back after a similar block in China, there could be more casualties this time around.
Thailand’s crackdown on digital assets comes as individuals -- especially young investors -- boost their cryptocurrency trading in search of better returns amid the country’s economic slowdown. Commercial banks have been cautioned against direct involvement in trading of digital assets due to high volatility, uncertainty and perils.
“As the current payment system in Thailand is already highly efficient, the use of digital assets to pay for goods and services would not add much benefit to consumers and businesses, the SEC said in a statement on Tuesday. Nonetheless, “relevant government agencies support the role and development of financial technologies such as blockchain in enabling financial innovation, without preventing investment in digital assets.”
Regulators have issued a series of guidelines for the new rules on digital assets as means of payments. The SEC is asking for feedback from the public on the proposals until Feb. 8 before implementing them. Digital-asset operators will need to comply with new regulations within 15 days of them being finalized.
- Merchants must refrain from advertising, promoting and facilitating digital assets as means of payments
- Participants such as exchange operators and brokerages must not support or promote use of digital assets as means of payments
- Merchants will not be allowed to operate e-wallets to receive customers’ payments in the form of digital assets
- Licensed digital-asset participants such as exchange operators and brokers must transfer money from the sales of digital assets only to the sellers’ accounts
- No transfers of funds from sales of digital assets can be made to accounts of persons other than those of actual sellers of those assets
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