Deputy Prime Minister Somkid Jatusripitak has ordered the Bank of Thailand and Ministry of Finance to revise laws to make Thailand more amicable to FinTech, implement regulatory sandboxes and especially focus on Bitcoin, which is still illegal in the Kingdom. All of this is part of a drive to make Thailand a FinTech hub of the CLMV (Cambodia, Laos, Myanmar and Vietnam) region and part of the country’s Thailand 4.0 vision.
However, Bank of Thailand governor Veerathai Santiprabhob poured cold water on the request, saying that it was too soon to change laws to support Bitcoin, which he described as an investment unit that is very high-risk and very volatile. Veerathai noted that many countries had used “Bitcoin investment units” to pay for goods and services, and there are some in Thailand, despite not having any laws and regulations to back it up.
Last year Veerathai similarly put the brakes on deputy Junta leader Air Chief Marshal Prachin Junthong’s call for investment in FinTech startups, saying that all such startups would need to apply for licenses.
In February, Microsoft, the Stock Exchange of Thailand and Accenture were in agreement when they told Disruptive.Asia at a Microsoft event that Bitcoin and blockchain was not going to happen in Thailand this year until – at the very least – the Bank of Thailand changed its regulations on currency controls. Any crypto-currency token interacting with a foreign currency would likely be illegal in Thailand – thus, only small-scale trials could be conducted where every user could be controlled.
Much of this can be explained by the aftermath of the 1998 financial crisis that emanated from the Thai baht peg to the US dollar breaking. Since then, the Bank of Thailand has refuted all attempts to liberalize the baht, maintaining strict controls, citing the need to protect the country from a repeat of that financial crisis. Due to its liquidity, Bitcoin has become a tool for many to circumvent Bank of Thailand currency controls. All local Bitcoin exchanges have a requirement that any Bitcoin bought or sold from them must never touch any foreign currency transactions.
Per Lind, a consultant and backer of the IOTA token crypto-currency based in Bangkok, said that the floodgates had already opened, and in the 18 month period up to November 2016, it was estimated that over $15.3 million (520 million baht) had been transferred via crypto-currencies, bypassing Bank of Thailand rules.