Thailand’s Banks Can Now Open Subsidiaries to Invest in Cryptocurrencies

  • Bank of Thailand (BoT) has now allowed local banks to open subsidiaries for investing in cryptocurrencies.
  • Subsidiaries may also offer brokerage services to crypto dealers.

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.

Global Task Force, U.S. Tax Agency, SEC Dominate Crypto Headlines

Regulations are ruling the crypto headlines so far this week. Over the past 24 hours, we’ve learnt the Financial Action Task Force (FATF) is reportedly set to finalize new international standards for regulating cryptocurrency firms next month. The commissioner of the Internal Revenue Service (IRS) has stated his agency has “made it a priority” to issue more comprehensive crypto tax guidance “soon.” Finally, the U.S. Securities Exchange Commission (SEC) announced it would delay, once again, its decision on the VanEck and SolidX Bitcoin exchange-traded fund (ETF) proposal.

At the time of writing, bitcoin (BTC) and ether (ETH) are trading at $7,945.4 and $252.9; a 0.54% and 0.83% jump over the past 24 hours, respectively. As for the MVIS CryptoCompare Digital Assets 10 Index, it is currently tracking at 3,822.7 (-0.6%).

Global Standards for Regulating Crypto Firms Next Month

According to reports from CoinDesk, the FATF is set to finalize new international standards for regulating cryptocurrency firms next month. These standards, they report, are widely expected to subject crypto exchanges, wallet providers, and other businesses to the “travel rule” – a colloquial term given to a rule found in the Bank Secrecy Act (BSA) that requires all financial institutions to pass on certain information to the next financial institution, in certain funds transmittals involving more than one financial institution.

Introduced in 1996 in the U.S., the “travel rule” is designed to help law enforcement agencies detect, investigate, and prosecute money laundering and other financial crimes by preserving an information trail about persons sending and receiving funds through funds transfer systems. The arrival of such international standards would go beyond the basic know-your-customer requirements that are widely enforced in the crypto space at present.

IRS Commissioner: More Detailed Crypto Tax Guidance ‘A Priority’

According to letter from IRS Commissioner Charles P. Rettig dated May 16, the agency has “made it a priority” to issue a more comprehensive tax guidance for cryptocurrencies. The Commissioner’s letter was written in response to a request from 21 Congressmen to provide clarity on tax treatment in relation to cryptocurrency holdings.

In 2014, the U.S. tax agency issued a guidance for cryptocurrency. In his May 16 response letter, Rettig revealed the IRS will “soon” issue more robust guidance. “I share your belief that taxpayers deserve clarity on basic issues related to the taxation of virtual currency transactions,” the Commissioner wrote.

SEC Delays Decision on VanEck SolidX Bitcoin ETF

The SEC announced the postponement of a decision regarding the VanEck SolidX bitcoin ETF proposal. The postponed ETF proposal was initially filed over a year ago. In January – amid the U.S. Government shutdown – it was withdrawn, only to be resubmitted later that month. On March 29, the commission delayed the joint proposal for the first time. The SEC must announce its decision – or, for the final possible time, postpone its decision – on the proposed bitcoin ETF no later than August 19.

Notably, the U.S. investor watchdog is seeking comments from the public in relation to the proposed VanEck SolidX bitcoin ETF. To guide commentary, they included fourteen questions in Monday’s filing. Comments must be submitted within the following 21 days, whilst rebuttals to said comments are due within the next 35 days.