However, central banks around the world are mostly against it because digital currency allows for direct peertopeer transactions and therefore bypasses regulators and middlemen.
In the West, on the other hand, libertarians are behind digital money as they want to operate free from the intervention of regulators or manipulation by traditional financial institutions. Thailand, too, has plenty of bitcoin investors who expect its value to increase and offer them easy profits.
Central bank governor Veerathai Santipraphob has made his position clear: digital currencies are not legalฌly binding or even a recognised medium of exchange, since there is no official regulator overseeing them in the same way that central banks in every country oversee their own country’s official currency. Regulation is needed to ensure that currencies do not inflate out of control – this can cause prices to rise and hurt the economy, says Veerathai. The value of bitcoins (XBT) has been highly volatile, rising at one time to nearly $20,000 but recently dropping to its current level of $7,600. A currency’s value should be stable and bitcoin clearly lacks that quality, said Veerathai.
The government is drafting a law to govern digital currencies and so far Thai authorities are agreed that digital currencies should be treated as just one of type of asset, not as a currency.
This suggests that cryptocurrencies, as digital assets, will not be banned in Thailand, so investors will still be raise funds by issuing initial coin offerings in the same way as initial public offerings when a company is due to be listed on a stock exchange.
However, digital assets are to be treated as having a lower status than shares – the Revenue Department plans to impose a 15 per cent with holding tax on profits or dividends generated by trades in digital assets. Normal shares sold outside the stock market are subject to a 10 per cent capital gains tax while shares sold in the stock market are exempted from tax.
The Blockchain technology behind bitcoin and other cryptocurrencies has been touted as so promising that it has the potential to revolutionise financial markets. Its supporters say it guarantees transparency as everyone can access all historical transactions and is also difficult to hack since the cost of hacking is more than expected returns.
Sceptics, however, doubt its ability to revolutionise financial market because it is inherently inefficient. The process of verifying transactions takes too long compared with existing technology and many investors, especially in Japan, have loss their investments due as hackers stealing their bitcoins.
Many startup companies around the world have started to apply blockchain technology to such businesses as solarelectricity trading.
Polapat Arkkrapridi, managing director of Corporate Venture Capital, who is upbeat about the technology, said many people were only looking at the current state of the blockchain technology but it would advance over time and overcome its limitations.