A representation of Bitcoin is seen in front of a stock chart and a US dollar in this illustration. (Reuters photo)
Although Thailand has banned the use of digital assets to pay for goods and services, some organizations believe they can still be used as a future alternative currency.
The Federation of Thai Industries (FTI) believes cryptocurrency could become an alternative currency, to be used alongside physical cash, with the Russian-Ukrainian war bolstering prospects of digital assets becoming a medium of exchange.
The federation encouraged entrepreneurs to take a closer look at cryptocurrency to find out if it can become a new payment channel, but the risks of using this digital money, detached from the financial systems of the State, are of concern, said Kriengkrai Thiennukul, vice president of the FTI.
Thailand’s Securities and Exchange Commission (SEC) has banned the use of digital assets to purchase goods and services, effective April 1, citing concerns about the country’s financial stability, risks of cyber theft and losses due to currency volatility.
The rules are based on joint discussions between the SEC and the Bank of Thailand on the benefits and risks of digital assets.
Cryptocurrencies such as Bitcoin, Ethereum and Solana rose rapidly in value after Russia invaded Ukraine in late February. The war led to Western sanctions, including the withdrawal of some Russian banks from the SWIFT international payment system, and a US ban on imports of Russian oil, coal and liquefied natural gas.
While Russia’s financial transactions with foreign countries were very limited, along with the collapse of the value of the ruble, cryptocurrencies came into the spotlight, providing a new way to transfer money and make payments.
The Russian government has once again turned its attention to cryptocurrency, after years of not supporting its domestic use.
The government previously banned cryptocurrency mining in Russia and banned cryptocurrency from entering digital circulation.
“The war has made cryptocurrency more popular. Russia has redefined it as a currency rather than treating it as a digital asset,” said Kriengkrai, who is also chairman of the Thai-Russian Business Council.
“Some countries have started considering following Russia, which makes it possible for cryptocurrency to become a global currency.”
With the sanctions still in place, cryptocurrencies can solve payment problems between Russia and its trading partners, he said.
Although the SEC remains thoughtful and maintains its ban on the use of digital assets for payments for goods and services, the FTI believes that Thailand should not miss an opportunity to follow the cryptocurrency trend.
The manufacturing sector is studying what will happen if cryptocurrency replaces major global currencies, despite its image as a highly volatile and speculative currency.
“FTI members and many companies have increasingly talked about this issue and are conducting studies to see if it can provide a new channel for doing business with foreign countries,” Kriengkrai said.
The federation also plans to partner with the Stock Exchange of Thailand to jointly host a course aimed at educating entrepreneurs about cryptocurrency.
“We are discussing a schedule, which is not yet clear at this stage,” he said.
Kongsak Khoopongsakorn, president of the Southern Chapter of the Thai Hotels Association (THA), said cryptocurrency is seen as an alternative payment method for operators and can be used by holders of digital assets or those who do not do not want to carry large sums of money on a trip.
Traditional payment methods such as credit cards and cash are unlikely to be replaced by cryptocurrency anytime soon, Kongsak said.
But if the Bank of Thailand leaves the door open to digital currency as a payment option, the country may be able to avoid incidents such as earlier this year when Russian tourists in Thailand were unable to pay for goods or services, he said.
At the start of the financial sanctions against Russia, some tourists quickly encountered problems with transactions in Thai hotels.
The THA and the Russian authorities solved the problem by switching to other payment methods, since the use of cryptocurrency is prohibited in Thailand.
Kongsak said cryptocurrency could be an attractive alternative payment method, but some tourism operators are hesitant to accept it as they worry about its high volatility.
Proud Limpongpan, co-founder and chief marketing officer of digital exchange operator Zipmex Thailand, said the strict cryptocurrency rules were unfortunate for industries such as tourism, as the regulatory tightening could deprive these industries the opportunity to capitalize on a digital asset payment system.
For example, she referenced a car show where people were allowed to directly pay for cars with cryptocurrency. However, after the imposition of SEC regulations, customers now have to liquidate their cryptocurrency first and use fiat money for payment, which is inconvenient.
Ms Proud said Zipmex previously planned to partner with Central Group to launch a crypto debit card service that allows customers to pay for goods with cryptocurrency, but that is now impossible under new regulations. .
However, Zipmex will still launch the service in territories where cryptocurrency payment is legal, such as Hong Kong and Australia, she said.
Ms Proud said Thailand’s digital asset industry may grow more slowly due to tight controls.
She understands that regulators want to protect investors, but said the strict regulations will make Thailand unattractive to foreign investors looking to invest in the digital asset space.
“Normally a regulator would trust us as a licensee to do business with transparency,” Ms Proud said.
Zipmex operates in four countries – Australia, Thailand, Indonesia and Singapore – and plans to expand further into new markets in Asia-Pacific.
The company plans to launch its own Visa-branded payment card soon that will give cardholders the freedom to convert their digital assets into fiat currency and spend anywhere Visa is accepted, she said.
Atthakrit Chimplapibul, managing director of Bitkub Online, said the company had halted all activities prohibited by the SEC, which he said was unfortunate because some of them could have helped Thailand’s economic recovery.
Mr Atthakrit said the company previously planned to launch a service allowing tourists to use cryptocurrency as payment in Thailand.
The service would have made the payment process easier for visitors holding cryptocurrency and attracted more tourists to Thailand during the upcoming peak season, he said.
Voralak Tulaphorn, marketing director of The Mall Group Co, one of the country’s leading department store chains, said it was okay if cryptocurrency was not allowed for payment in retail stores. .
She said her company already makes various payment methods available to customers at its retail complexes and uses various marketing campaigns to attract consumers.
“Cryptocurrency is a global trend and The Mall has launched a campaign related to non-fungible tokens to educate customers, while also trying to reach out to the crypto nomads living here,” Ms. Voralak said.
“If cryptocurrency is not allowed to be used as a means of payment, we will follow government rules and we do not believe this will impact retail as a whole.”
ONE SIZE DOES NOT FIT ALL
Karndee Leopairote, Chair of the Executive Committee of DigitaLife Corporation and Executive Vice President of FutureTales Lab, said she supports banning cryptocurrency as a means of payment to maintain the overall stability of the country’s economic and financial system.
Ms Karndee said regulators should not impose future rules on digital assets in a blanket fashion, as they are not a single asset, but can be broken down into multiple types or subsets.
Nor should enforcement of the rules be done on a one-size-fits-all basis, she said.
The development of digital asset regulations should begin with the intention to support the development of innovation, rather than the notion of prohibiting its use, Karndee said.
The use of digital assets for utility and investment purposes as well as a means of payment has grown around the world, especially among Gen Z and Millennials.
Younger generations, especially new workers, can build their wealth by investing in digital assets, she said.
Dusida Worrachaddejchai and Pitsinee Jitpleecheep