Thailand's central bank tells banks not to offer cryptocurrency transactions

The Bank of Thailand said it does not want commercial banks to be directly involved in the trading of crypto-assets.

The order was issued on Dec. 7 by Chayawadee Chai-Anant, the central bank's senior governor, who cited risks associated with high price volatility.

"We don't want banks to be directly involved in digital asset transactions, because banks are (responsible) to customer deposits and the public, and there are risks."

According to the Bangkok Post, commercial banks are investing in local cryptocurrency exchanges amid the central bank’s latest crackdown on digital assets.

Earlier in November, Thailand’s oldest bank, Siam Commercial Bank (SCB), announced that it was acquiring a 51 percent stake in Bitkub, the country’s largest cryptocurrency exchange. At the end of August, the Zipmex cryptocurrency exchange raised $1.3 billion in funding from Ayudhya Bank, the country’s fifth-largest lender.

The Bank of Thailand (BoT) has taken an increasingly tough stance on digital assets, despite their growing popularity among individuals, companies and banks in Thailand.

Last week, Bank of Thailand senior director Sakkapop Panyanukul warned businesses against accepting cryptocurrencies, saying: “If other currencies become widely used, it will affect the ability of the central bank to oversee the economy”. When referring to tokens that are not backed by an asset, he refers to them as “blank coins.”

The central bank has also expressed concerns about the use of cryptocurrencies to pay for goods and services. In a related report on Dec. 8, Chai-Anant commented that digital assets can be bad for merchants and consumers because they are “associated with high price volatility and risks of cyber theft, personal data breaches, and money laundering.”

"Such risks could affect payment system stability, financial stability, and consumer protection if digital assets are widely used as a means of payment for goods and services."

The BoT’s warning comes two weeks after Thailand’s tourism ministry ramped up efforts to encourage the cryptocurrency rich to visit the country. The Tourism Authority of Thailand declared the country “crypto-friendly,” but apparently, the central bank doesn’t want it to be too friendly.

Thailand's economy relies heavily on tourism, which has been hit by the pandemic. Much of Thailand is still under lockdown, with few tourists visiting the country at press time, despite the country’s central bank trying to lure crypto nomads and the like to a country where the central bank doesn’t want them using digital currencies.