Thailand’s crypto community will no doubt be disappointed by the SEC’s move. The Mall Group, a large retailer, started installing digital asset payment devices in Dec. 2021. A real estate company under Charoen Pokphand Group conglomerate sells houses that can be bought with digital assets. According to Statista’s research on 56 crypto markets, 31% of Thais own digital assets, second only to Nigeria.
The value of digital assets held by Thais reached 114.5 billion baht (US$3.4 billion) as of January, up sharply from 9.6 billion baht a couple of years ago, while there are now 1.98 million active trading accounts, compared to just 170,000 before the pandemic.
Unfortunately for Thailand’s crypto community, the SEC is unlikely to reverse course. From the regulator’s perspective, allowing bitcoin and other digital assets for payments has no upside. They are, after all, decentralized, beyond the control of the country’s central bank. Pumping them into the financial system for payments purposes could have a destabilizing effect, whether from the standpoint of money laundering risk – because of their decentralized nature crypto transactions are harder than fiat ones for authorities to track – and they do not boost efficiency in the payments market either due to their volatility and high transaction fees.
The development of any unit of pricing other than the Thai baht will increase the cost of economic activities and reduce the efficiency of monetary policy transmission, the regulator said. In the event of a liquidity crisis, the BOT will not be able to provide assistance to various financial institutions in forms other than the baht, it said.
We do not think it is a coincidence that Thailand is taking crypto off the table as a payments option as it explores launching a digital baht. A CBDC could offer greater efficiency in Thailand’s payments ecosystem and boost financial inclusion without aggravating systemic financial risk. The BOT’s wholesale CBDC experiment had already helped lower cross-border transaction costs and increase efficiency, BOT governor Sethaput Suthiwartnarueput said in December. The BOT is on course to begin a pilot project for its planned retail digital currency in the fourth quarter.