Thailand Central Bank Allows Financial Institutions To Engage In Crypto Activities

News, Regulation | August 6, 2018 By:

The Bank of Thailand (BOT), the country’s central bank, has issued a circular giving all local financial institutions permission to engage in cryptocurrency activities.

In February of this year, the BOT prohibited financial institutions in the country from five key cryptocurrency activities, including banning customers from buying cryptocurrencies with credit cards. At the time, the central bank said “it was worried that they may be used in illegal activities such as money laundering or supporting terrorism.”

In a new circular dated August 1, the central bank canceled its previous circular, citing the country’s new regulatory framework for cryptocurrencies and initial coin offerings (ICO). As a result, local commercial banks and financial institutions can now engage in activities involving cryptocurrencies and digital tokens. The banks’ subsidiaries, such as asset managers, brokerages, insurance firms, etc., may also issue their own cryptocurrency, but they need to get permission from their respective regulatory body – the Thai Securities and Exchange Commission (SEC) for brokers or the Thai Office of Insurance Commission (OIC) for insurance companies.

The rules for commercial banks are much more strict. While they are allowed to issue or invest in cryptocurrencies for the purpose of developing or improving their services to customers by applying for the regulatory sandbox, they cannot issue digital tokens or provide any service selling them. They are also not allowed to invest in digital assets which includes “both tokens and cryptocurrencies,” as well as solicit or give advice on crypto investments to anyone that is not an institutional or accredited investor as defined by the SEC.

The new circular came after the regulatory framework for ICOs went into effect last month, which mandates ICO issuers to file an application for approval with the SEC before starting a token sale. ICO issuers must be companies established under the Thai legal jurisdiction and have registered capital of at least 5 million baht ($156,625 USD).