The Bank of Thailand (BoT), the country’s central bank, reportedly gave all local financial institutions permission to launch subsidiaries, which may offer certain types of banking services to cryptocurrency investors.
Thailand’s banks will now be able to offer brokerage services to crypto-related companies, invest in crypto and blockchain startups, or even operate their own crypto business, according to a recent announcement by the BoT.
Subsidiaries May Issue Cryptos
The banks’ subsidiaries may also issue their own digital currency, the announcement noted. However, Thailand’s central bank will still not let local financial institutions directly offer banking services to individuals and organizations dealing in cryptocurrencies.
While local banks in the country have been allowed to establish subsidiaries for certain types of crypto-related activities, they are strictly prohibited from providing their own special services or investment schemes involving digital currencies. Local banks and their licensed subsidiaries are also not allowed to buy, sell, or trade cryptocurrencies on behalf of their customers.
Thailand’s financial institutions may, however, recommend approved sources for investment advice on digital assets. Banks can also conduct an initial coin offering (ICO), but it should be geared towards “financial innovation”, which aims to enhance existing financial services. The ICO must also adhere to guidelines outlined in BoT’s regulatory sandbox.
Moreover, Thailand’s banks may only work with crypto firms regulated by the country’s Securities and Exchange Commission (Thailand’s SEC) and the Office of Insurance Commission (OIC).
In February, the BoT issued a circular instructing local banks not to trade or invest in crypto assets. Per the circular, financial institutions were prohibited from operating crypto exchanges, although independent digital currency exchanges could legally be established in Thailand after completing a registration process.
Cryptocurrencies Are Securities
Cryptocurrency purchases with credit cards were also banned by Thailand’s authorities, and in May, cryptos were classified as “digital assets or digital tokens.” This means they are considered securities and must be regulated by the Thai SEC.
Notably, in June, the BoT announced it was experimenting with a “new way of conducting interbank settlement” which could be implemented with a central bank-issued digital currency (CBDC). The reserve bank had said a CBDC could make it more efficient to process payments because it would require “less intermediation...compared to traditional systems.”
Recently in July, Thailand’s government released a comprehensive regulatory framework for ICOs, making it one of the first countries in the world to provide legal support for the controversial crowdfunding method.
Based on these developments, it appears authorities in Thailand are receptive to the evolving cryptocurrency market, but also seem to be looking to protect local firms and individual investors from risky and potentially fraudulent schemes.