Thailand have become the latest country to throw the book at crypto, banning crypto as a means of payment from April 1st. But does it actually matter?
Firstly, it’s important to clarify what has actually happened here. It is only the use of cryptocurrency for payments that has been banned. Crypto trading, therefore, and the ownership of digital assets is still as legal as walking around with a 1000 Thai baht note in your pocket.
In fact, this triple A study estimated Thailand as the eleventh highest owner of cryptocurrency per capita in the world, at 5.2%. And citizens are not going behind law enforcers’ backs to embrace crypto – a series of initiatives have been announced in recent years in order to support the industry.
Last March, the country’s finance minister announced several tax reforms, most notably a exemption from 7% VAT for crypto trades on government-supported exchanges. In January of this year, the government also scrapped a proposal to introduce a 15% withholding tax on crypto, after listening to qualms from crypto traders. Thailand has very much been warm to crypto.
Why the ban?
So why, given the accommodating nature of Thai regulation to date, have they decided to ban payments? Well, the country’s SEC has deemed that crypto payments “may affect the stability of the financial system and overall economic system, including risks to people and businesses”.
The statement goes on to mention cyber crime, money laundering and also the high volatility of crypto as reasons for the ban. In addition to the price volatility, the SEC outlined high transaction fees.
It does seem a bit unusual that the Thai SEC are so wary of some of crypto’s downfalls while also seeming to endorse its use elsewhere. They reinforced this overall accommodating stance by going on to say “however, the BOT and the SEC, as well as other government agencies, recognize the benefits of technologies behind digital assets such as blockchain and value and support the use of technology to further innovation.”
What does it mean?
I’m not sure this has too many ramifications. They had hinted this was coming back in January, while also revealing they were working on a plan to regulate digital assets as a form of payment. So in all likelihood, this measure has been taken for the foreseeable until they feel they have developed laws capable of dealing with crypto.
And to be honest, crypto right now is not really ready yet for payments – it’s not its primary use case. I’m a crypto diehard but I don’t pay for my pints on a Friday night in Bitcoin. I don’t pay my phone bill in ETH.
That time may come, but for now it’s not a major part of the industry. Like the Thai SEC says, the volatility and fees involved can often be prohibitive. But anyone looking upon this news from Thailand as bearish are misreading it, in my view.
Thailand likes crypto. This doesn’t change much.