Unprecedented virtual currency fever, Thailand is about to introduce a number of “red limits”

Unprecedented virtual currency fever, Thailand is about to introduce a number of “red limits”

Thailand plans to introduce a number of detailed regulations for the digital assets sector to reduce risks to the financial system and provide better protection for investors as more and more people in this country have fallen into the cryptocurrency craze …

According to Bloomberg, the Bank of Thailand is expected to issue a consultation document in January aimed at building consensus between the population and the relevant authorities on three “red lines” for private individuals. Individuals and organizations working in digital currency, green finance, and related fields.

The governor of the Thai central bank, Sethaput Suthiwartnarueput, announced this information in an interview on December 13th. These regulations are designed to encourage technological innovation, financial inclusion and systemic risk management, Sethaput said.

The Bank of Thailand is currently working with the Securities and Exchange Commission (SEC) and the Treasury Department to “draw red lines that we don’t want to see,” Sethaput said. As an example, he cited that “virtual money cannot become a means of payment”.

Thailand’s move to introduce digital asset regulations is in the context of virtual currencies, which is attracting a great deal of attention from investors around the world in general, and in this country in particular, as investors seek the right level of investment from low interest rates and weak economic growth due to the Covid -19 pandemic. Last week, the Bank of Thailand warned commercial banks not to “directly” engage in digital asset trading, highlighting the high volatility and potential risks to financial and payment systems.

“We wanted to make sure we struck the right balance between enabling financial innovation and managing risk,” said Sethaput. The new regulations offer consumers sufficient protection, because “the risks are underestimated for the time being”, according to the governor.

The transaction value on the 7 largest licensed virtual currency exchanges in Thailand has reached 221 billion baht, which is 6.62. is equivalent to Billion USD, in November from 18 billion baht in the same period last year – according to data from SEK Thailand. This fever has drawn investment capital from leading banks in Thailand such as Siam Commercial Bank and Kasikornbank.

Mr Sethaput said there is room for digital assets as an investment, but the high volatility of cryptocurrencies poses risks to the financial system. He said the Central Bank of Thailand would work with SEK to offer sufficient protection in this area.

The governor stressed that a retail digital currency issued by the Thai central bank to be tested next year will be more effective in achieving financial inclusion in Thailand without affecting the stability of the financial system.

Thailand is currently testing a wholesale digital currency issued by the central bank, and Mr Sethaput said the digital currency will help reduce cross-border transaction costs and increase transaction efficiency.