Government, central bank display regulatory wisdom in embracing crytocurrencies
Thailand’s move to adopt blockchain and other digital technologies has earned praise from foreign observers. One such move that was drawing interest from overseas was the government’s recent issuing of an executive decree to regulate all digital assets.
As one of the first countries to do so, Thailand is laying down a legal framework for Bitcoin and other cryptocurrencies, for initial coin offerings (ICOs) and for other new forms of digital assets, as well as securities. The decree empowers the Securities and Exchange Commission (SEC) to regulate all digital assets.
The SEC has already listed a number of existing cryptocurrency exchanges, brokers and dealers currently authorised to conduct business, while additional operators will be required to apply for licences before setting up trade.
The Cabinet decree endorses seven cryptocurrencies including Bitcoin, Ethereum and Ripple, this helping the public make better decisions on their investments when it comes to comparing cryptocurrencies, ICOs and other digital assets, especially less sophisticated investors who could be more easily misled or cheated in scams.
The SEC has categorised ICOs as investment tokens, utility tokens and cryptocurrency.
According to Techcrunch.com, the Thai SEC regulatory engagement is an encouraging sign in a region where governments are moving quickly to provide a legal path for introducing cryptocurrency and blockchain technologies. It notes that the regulatory response to emerging technologies as shown by Thai authorities and their timetable puts the Kingdom ahead of even some Western and other Asian countries.
One advantage is the Thai openness to knowledge exchange, as exemplified by the OmiseGo team of local experts on ICOs, while more foreign businesses have begun to explore crypto opportunities in Thailand, where both the private and public sectors are experimenting with the underlying blockchain technology.
In the public sector, the Bank of Thailand has launched a wholesale Central Bank Digital Currency (CBDC) project called Inthanon for money transfers in the country’s inter-bank market using the blockchain technology. Eight commercial banks are participating in the Inthanon initiative. The wholesale CBDC has several benefits, including reduced cost and more effective conduct of the central bank’s monetary policy.
In addition, there are pilot projects for retail CBDC as undertaken by the central banks of China and Sweden. In this context, the central bank can issue cryptocurrency to consumers and businesses to settle various transactions without the need to use cash. These retail CBDCs could be accessed through electronic wallets and keys on smart phones and phone apps.
Sweden, for example, is testing the retail CBDC model, while Thailand is still weighing the pros and cons of this form of electronic payment, which is a further evolution of the existing e-payment platform such as the government-sanctioned PromptPay.
Overall, a well-balanced policy in approaching the new technologies is crucial to the country’s international competitiveness, as exemplified by the adoption of rules and regulations on digital assets.
In addition, the central bank’s timely response to exploring opportunities resulting from the advent of cryptocurrencies and their underlying blockchain technology, which is a form of distributed ledger system, is no less important.