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.

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U.S. Congressman McHenry Calls Bitcoin ‘An Unstoppable Force’ at Libra Hearing

As far as cryptocurrency fans are concerned, one U.S. Congressman, Patrick McHenry, was the star of the House Financial Services Committee hearing on Libra on Wednesday (July 17). 

Before we talk about what happened at this hearing, and more specifically, how Congressman McHenry managed to endear himself to all blockchain and cryptocurrency fans, it might be helpful to present a very brief biography of him here.

Patrick Timothy McHenry is the U.S. Representative for North Carolina's 10th congressional district. He is serving his eight term at the U.S. congress, where he is currently the Republican Leader of the House Financial Services Committee, "a committee he has served on since he was elected to Congress" (in 2004, when he was just 29 years old).

On Wednesday (July 17), a day after Facebook's David Marcus, who is a co-creator of Libra and the head of the Calibra project, faced tough questions at the U.S. Senate Committee on Banking, Housing, and Urban Affairs (aka "Senate Banking Committee"), came the real grilling at a full hearing (titled "Examining Facebook’s Proposed Cryptocurrency and Its Impact on Consumers, Investors, and the American Financial System") of the U.S. House Committee on Financial Services.

Committee Chairwoman Maxine Waters (D-CA), who had previously implored Facebook to stop working on the Libra project until Congress could understand better the implications of what Facebook's proposed cryptocurrency, started the hearing by delivering a prepared statement, during which she, once again, expressed her "serious concerns with Facebook’s plans":

This venture is slated to be based in Switzerland, which has a history as a monetary haven for criminals and shady corporations. Facebook’s plans raise serious privacy, trading, national security, and monetary policy concerns, not only for Facebook’s over 2 billion users, who will have immediate access to these products, but also for consumers, investors and the global economy.

 Congressman McHenry's gave his opening remarks around 11:00 (Eastern Time). Here were the main highlights:

  • "Washington must go beyond the hype and ensure that it's not the place where innovation goes to die."
  • "Just because we may not fully understand a new technology proposal does not mean we should immediately call for its prohibition, especially when that proposal is just that — a proposal."
  • "The reality is whether Facebook is involved or not, change is here. Digital currencies exist. Blockchain technology is real. And Facebook's entry in this world is just confirmation, albeit at scale."
  •  "The world that Satoshi Nakamoto, author of the Bitcoin whitepaper, envisioned—and others are building—is an unstoppable force."
  • "We should not attempt to deter this innovation, and governments cannot stop this innovation. And those that have tried have already failed."
  • "Instead of a knee jerk reaction of banning something before it begins, my Replication colleagues and I want to first try an understanding. An in turn, based off what we learn, determine whether or not our current regulatory framework meets the demands of this new technology."  

Then, around 15:30 (ET), McHenry began his questioning of David Marcus about Libra; some of his most interesting questions are listed below.

McHenry: Is it a security?

Marcus: We don't believe it is, Congressman.

McHenry: Is it a commodity?

Marcus: Congressman, based on current U.S. law, it might be a commodity, but we see it as a payment tool.

McHenry: Is it an exchange traded fund?

Marcus: It is not, Congressman.

Congressman McHenry repeated his claim about Bitcoin being an unstoppable force during an interview with Andrew Ross Sorkin on CNBC's morning news and talk program "Squawk Box":

I think there is no capacity to kill Bitcoin. Even the Chinese with their firewall and their extreme intervention in their society could not kill Bitcoin.

Sorkin then told McHenry that although it might not be possible to technically "kill" Bitcoin, it was possible for governments to create legislation that made access to Bitcoin illegal for their citizens at fiat on/off ramps such as exchanges (e.g. Coinbase) and custodial wallets (e.g. Calibra), and that would "effectively make it very very difficult for the mainstream to use it." Sorkin then said that's why investors in Bitcoin were worried, which explained the recent drop in price.

McHenry replied:

Yes, so the price has come down to roughly $10,000... But you are talking about something that... people were giving away for free. It's now trading at $10,000... But the essence of Bitcoin is what Libra, Facebook, and corporates are trying to mimic.