Bank of Thailand warns against illegal baht-backed stablecoin
Thailand’s central bank is warning the public against using a stablecoin that purports to be backed by the country’s sovereign currency. The regulator claims that the stablecoin exposes the users to such risks as money laundering and cybercrimes.
The Bank of Thailand (BoT) issued the warning against Thai Baht Digital (THT), Bangkok Post reports. BoT considers any activity involving the stablecoin illegal, Pruettipong Srimachand, the bank’s assistant governor of the legal group stated. He referred to the 1958 Currency Act which criminalizes the creation, issuance and usage of money.
Srimachand revealed that the new stablecoin is created on Terra, a platform supporting the issuance of stablecoins. He added:
“Although THT is not used as a medium of exchange, it could cause fragmentation of the Thai currency system should THT or other stablecoins come to replace, substitute or compete with baht issued by the central bank. Such usage would ultimately affect the general public’s confidence in the stability of the national currency system, which is the cornerstone of all economic activities.”
While deeming other stablecoins illegal, the BoT has been working on its own central bank digital currency under Project Inthanon. In its most recent move, the bank joined forces with China, Hong Kong and the UAE in CBDC research. BoT has been working on the research project with Hong Kong’s Monetary Authority for several months now, recently welcoming the other two countries to “further explore the capabilities of distributed ledger technology.”
Thailand isn’t the only country that has declared it illegal to issue stablecoins pegged to the local currency. As CoinGeek reported, China drafted a law in 2020 that legalized the digital yuan but banned its competitors. Under the law, China prohibits any entity from making or issuing a tokenized note or digital token that may replace the digital yuan’s market circulation.
“For anyone that violates such regulation, the PBoC will halt such activities and forfeit any proceed from the making and selling of yuan-backed digital tokens and issue a fine that is up to five times of the involved proceeds,” the draft law stated.
Most recently, India followed suit, proposing a draft bill that bans “private cryptocurrencies” and paves the way for a digital rupee.
In the U.S, a proposed bill in Congress is seeking to end the era of unregulated stablecoins. Aptly titled the STABLE Act, it requires stablecoin issuers to obtain a banking charter and abide by all banking regulations.
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Thai Central Bank Declares Baht-Pegged Stablecoin Illegal in Violation of Currency Law – Regulation Bitcoin News
Thai Central Bank Declares Baht-Pegged Stablecoin Illegal in Violation of Currency Law
Thailand’s central bank has declared a stablecoin pegged to the Thai Baht illegal, citing violation of the country’s currency law. The Bank of Thailand (BOT) is currently working on a regulatory framework for stablecoins.
Thailand Bans Baht-Pegged Stablecoin
The Bank of Thailand, the country’s central bank, issued a press release Wednesday declaring a stablecoin called the Thai Baht Digital (THT) illegal.
“It has come to the BOT’s attention that a new stablecoin, THT, has been created abroad on the Terra platform. One unit of THT is denominated in and valued at one Thai baht,” the announcement describes.
The central bank claims that “Although THT is currently not used as a medium of exchange, it could cause fragmentation to the Thai currency system should THT or other similar stablecoins come to replace, substitute or compete with baht issued by the BOT,” asserting:
This would ultimately affect the general public’s confidence in the stability of the national currency system, which is the cornerstone of all economic activities. Therefore, any activity involving THT is deemed illegal, as the creation, issuance, usage or circulation of any material or token for money is a violation of Section 9 of the Currency Act 1958.
Following the announcement regarding the stablecoin THT, the Bank of Thailand said that it expects to issue regulations on stablecoins this year, Reuters reported Friday, citing a BOT assistant governor, Siritida Panomwon Na Ayudhya.
The central bank “will regulate foreign currency-backed stablecoins, asset-backed stablecoins, and algorithmic stablecoins that are not illegal,” the assistant governor revealed, noting that this regulation will not cover cryptocurrencies such as bitcoin and ether.
She further explained that under the new regulation, “service providers of baht-backed stablecoins would need central bank approval as they may be classified as electronic money (e-money) and the BOT oversees risks associated with e-money, such as settlement and money laundering.”
What do you think about the Thai central bank declaring the stablecoin illegal? Let us know in the comments section below.
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The Bank of Thailand to introduce stablecoin regulation
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