Thailand has joined Russia and India in banning digital currency payments, even as more countries continue to explore the feasibility of bitcoin payments.
Thailand’s Securities and Exchange Commission (SEC) this week announced the ban on digital currency payments, which will come into effect on April 1. It gave digital currency payment processors 30 days to comply with the new regulations and stop all payments.
This decision was long in coming as the country’s central bank previously said that digital currencies lack the qualities of sound money and cannot be used to make payments. Just two months ago, the Bank of Thailand (BOT), the SEC and the Ministry of Finance issued a joint statement recommending a ban on digital currency payments “to avoid potential impacts on financial stability and the system economy of the country”.
At the time, the three identified price volatility, cyber theft, personal data leakage and money laundering as some of the challenges hindering the use of digital currencies for payments.
In its statement prohibiting digital asset payments, the SEC prohibited virtual asset service providers (VASPs) from encouraging or promoting the use of digital currencies as payment methods, including by advertising such services. They also must not incorporate tools that allow users to make such payments or open new accounts expressly to make Bitcoin payments.
In cases where VASPs discover that their users are making digital currency payments, they should report the misuse to the authorities and suspend or terminate the affected accounts.
The Thai SEC believes that digital currency payments pose a risk to the stability of payment and financial systems.
“The creation of a unit of account or a unit of price other than the Thai baht will reduce the effectiveness of the transmission of monetary policy to maintain commodity price levels. Furthermore, if there is a liquidity crisis in the country, the BOT will not be able to provide liquidity assistance to various financial institutions in forms other than Thai baht,” he said.
While Thailand bans digital currency payments, its neighbor Malaysia is considering legalizing them. Malaysia’s Deputy Minister of Communications recently revealed that the ministry has offered to make bitcoin legal tender and hopes the government will approve the proposal.
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