Thailand has banned the use of cryptocurrencies as a means of payment. Why?
The day before, the creator of Etherium, Vitalik Buterin, spoke about his concerns about the development of the cryptocurrency world. As the developer noted, digital assets can be used for money laundering and tax evasion, as well as to directly defraud investors. In addition, Buterin noted the risks to the global environment posed by miners’ computing equipment. Some of these arguments were used to ban the use of crypto in Thailand. Here’s a closer look at what’s going on.
We note that the topic of cryptocurrencies in Asia was raised by blockchain analysts the day before. In particular, Glassnode experts said that residents of the region are mostly getting rid of digital assets, as can be seen from the timing of activity by the traders involved. At the same time, residents of the U.S. and Europe are active buyers.
Asian sales volumes have been particularly strong in late 2021, as can be seen in the chart below.
Coin sales by Asian crypto investors
According to analysts, the reason behind this was the closure of various cryptocurrency exchanges within China due to the ban on digital asset interaction there. Due to this, many coin holders may have decided to get rid of them to avoid possible problems with the government.
Soon, using crypto as a means of payment will also not be possible in Thailand.
Where cryptocurrencies are banned
The ban was authored by the Securities and Exchange Commission of Thailand. As stated by its representatives today, from April 1, 2022 it will be prohibited to use crypto as a means of payment in the country.
Importantly, the ban applies to the use of crypto specifically as a means of payment for goods. However, it will still be possible for Thai citizens to invest in digital assets.
The justification for the ban was quite typical. According to Decrypt’s sources, the regulator noted that “cryptocurrencies could affect the stability of the financial system and pose risks to the country’s economy”.
Bitcoin logo sticker
Also as disadvantages of coins, SEC officials noted the possible loss of asset value due to increased volatility, risks of hacking due to hacker activity, as well as the possibility of personal data leakage. In addition, regulators specified that “Bitcoin-like cryptocurrencies could be used as a vehicle for money laundering.
Such findings are in line with discussions between the Securities and Exchange Commission and the Bank of Thailand on cryptocurrencies. The agencies had previously assessed the benefits and risks of digital assets and concluded that the cryptocurrency niche required regulation.
As the regulators specify, a ban on the use of coins as a means of payment will be in effect from 1 April. At the same time, businesses that support such services will be given until the end of the month to comply with the new rules.
Cryptocurrency card
The latter include a ban on advertisements for cryptopayments and appropriate warnings for customers of the platforms. That said, Commission officials are “aware of the benefits of the various blockchain-type technologies used to operate digital assets”. In addition, they support the use of these technologies to further innovate.
The SEC’s initiative is sure to come as a nasty surprise to locals. As noted by Bloomberg, as of January 2022, the estimated amount of crypto assets in the possession of citizens is the equivalent of $3.4 billion. At the same time, a few years ago, it was almost twelve times less.
In addition, representatives of the Tourism Authority of Thailand have previously emphasised crypto-assets and supported their popularisation. According to them, crypto helps to attract wealthy tourists, whose money in turn enables the country’s economy to recover in an era of pandemic.
Cryptocurrency investor
Here’s a rejoinder from spokesperson Yutasak Supasorn in November 2021
Cryptocurrencies are the future, so we should turn Thailand into a cryptocurrency-friendly society to attract an appropriate group of tourists.
Meanwhile, the correlation between Bitcoin and the S&P500 Index has reached a 17-month high. According to Arcane Research, the 90-day correlation figure between the main cryptocurrency and one of the most popular stock indexes is 0.49 – and this is the highest since October 2020, Coindesk reports.
Accordingly, the behaviour of BTC and popular stocks is now quite similar. Here’s a commentary on the topic by Mark Chandler, managing director and chief market strategist at Bannockburn Global Forex.
I would like to say that cryptocurrencies are reacting to fundamentals in the form of high inflation, but I think the main reason for growth is the rise in equities.
Cryptocurrency investors
Which means the expert cannot yet claim that investors have already taken up crypto solely because of its ability to grow in value in an unsuitable economic environment. Be that as it may, it now refutes the argument of the Securities and Exchange Commission of Thailand officials that coins are excessively volatile because they behave like stocks.
We believe that banning crypto as a means of payment will have a negative impact on Thailand's popularity among crypto investors. Still, now coin owners will not be able to pay for accommodation, food and other goods and services in the country. At the same time, the agency's representatives are not opposed to citizens investing in crypto, which means it all comes down solely to protecting the national currency.
Share your opinion on what is happening in our millionaires’ cryptochat. There we will discuss other topics that affect the decentralized assets niche.
Related posts
