Flash update: Thai regulators make surprise move towards a total clampdown on use of digital assets as a means of payment for goods and services.

Citing potential implications on the Thai economy and the stability of the country’s financial system, the Securities and Exchange Commission (SEC), Bank of Thailand (BOT), and the Ministry of Finance (MOF) released a joint statement on 25 January 2022 indicating their intention to introduce stricter regulations on the use of digital assets to pay for goods and services. This was released alongside prospective guidelines for service operators offering crypto payment services which, if implemented, would place Thailand alongside jurisdictions such as China, Russia, and Indonesia which have all banned the use of cryptocurrencies as a means of payment.

In a move that surprised digital asset service operators and crypto enthusiasts, the proposed restrictions come as an indication that Thailand may be reconsidering its pivot towards fully embracing cryptocurrencies. While previous regulations were enacted with the intention of formalising crypto-related businesses, the sudden shift towards introducing restrictive measures may indicate that Thailand’s openness towards cryptocurrencies is being reconsidered, diminishing hopes of developing an ecosystem that facilitates cryptocurrencies as means of payment.

While no laws have been executed or amended yet, the introduction of such restrictions by regulators would mean new crypto payment solutions, brokers, over the counter (OTC) dealers, and other digital payment platforms will be prohibited from facilitating transactions denominated in cryptocurrencies for goods and services. The guideline proposed by the SEC also lists six other activities that digital asset operators in Thailand will not be able to engage in, some of which include:

  1. Advertising or soliciting e-wallet services that indicate they can be used to store crypto assets that can be spent in exchange for goods and services;
  2. Creating payment systems that allow merchants to accept crypto payments;
  3. Allowing merchants to open e-wallets in order to accept crypto payments;
  4. Transferring Thai Baht to an account other than a trader who wants to exchange their crypto assets for fiat currency;
  5. Facilitating fund transfers between traders or other users for the purpose of receiving payment; and
  6. Encouraging the use of cryptocurrencies as a means of payment.

Despite their hard stance on the use of cryptocurrencies as a means of payment, Thai regulators have clarified that peer-to-peer transactions, trading or investing in crypto are still allowed. Bank of Thailand governor Sirithida Panomwon na Ayudhya also stated that the central bank and other relevant agencies will deliberate on permitting digital assets that are considered beneficial to the country, though she fell short on providing further details.

As previously mentioned, regulators have yet to implement or make changes to existing laws surrounding the use of cryptocurrencies for payments. A public hearing on the guidelines will be held until 8 February 2022 to gain further insight from stakeholders that will be affected by the proposed restrictions. It is likely, however, that the proposed restrictions will be met with contempt among digital asset service operators which will perceive them as hindrances to innovation and Thailand’s trajectory towards a digital economy.

Silk Legal will continue to monitor developments surrounding the proposed restrictions and will provide updates when available. For more information or clarifications about the implications of these restrictions, please contact us at [email protected] or by using the contact form provided on this page.