Did we miss the crypto boat?
In this image, a representation of bitcoin is shown in front of a stock chart and a US dollar. (Reuters photo)
Although Thailand has banned the use of digital assets to pay for goods and services, some organizations believe they could still be used as a future alternative currency.
The Federation of Thai Industries (FTI) believes that cryptocurrency could become an alternative currency to be used alongside physical money as the war between Russia and Ukraine increases the prospects of digital assets becoming a medium of exchange.
The association has encouraged entrepreneurs to take a closer look at the cryptocurrency to see if it can become a new payment channel, but the risks of using this digital cash, which is detached from government financial systems, are a concern, Kriengkrai Thiennukul said. Vice Chairman of the FTI.
Thailand’s Securities and Exchange Commission (SEC) has banned the use of digital assets to buy goods and services effective April 1, citing concerns about the country’s financial stability, risks of cybertheft and losses from currency fluctuations.
The rules are based on joint discussions between the SEC and the Bank of Thailand about the merits and risks of digital assets.
Cryptocurrencies like Bitcoin, Ethereum and Solana quickly rose in value after Russia invaded Ukraine in late February. The war led to Western sanctions, including the removal of some Russian banks from the SWIFT international payments system, and a US ban on imports of Russian oil, coal and liquefied natural gas.
With Russia’s foreign financial transactions severely curtailed, cryptocurrencies took the spotlight alongside the declining value of the ruble, offering a new way to transfer money and make payments.
The Russian government has taken another look at cryptocurrency after years of not supporting its domestic use.
The government previously banned cryptocurrency mining in Russia and prevented cryptocurrency from entering digital circulation.
“The war made cryptocurrency more popular. Russia has redefined it as a currency instead of treating it as a digital asset,” said Mr Kriengkrai, who is also the chairman of the Thai-Russian Business Council.
“Some countries started considering following Russia, making it a possibility that cryptocurrency could become a global currency.”
With sanctions still in place, cryptocurrencies could resolve payment issues between Russia and its trading partners, he said.
Although the SEC remains thoughtful and maintains its ban on using digital assets to pay for goods and services, the FTI believes Thailand should not miss an opportunity to follow the cryptocurrency trend.
Manufacturing is exploring what will happen as cryptocurrency replaces major global currencies, despite its image as a highly volatile and speculative currency.
“FTI members and many companies have increasingly spoken about this issue and are conducting studies to see if it can provide a new channel for doing business abroad,” said Mr. Kriengkrai.
The association also plans to partner with the Stock Exchange of Thailand to jointly organize a course to educate entrepreneurs about cryptocurrency.
“We are discussing a program that is unclear at this point,” he said.
Kongsak Khoopongsakorn, President of the Southern Chapter of the Thai Hotels Association (THA), said that the cryptocurrency is seen as an alternative payment method for operators and can be used by digital asset holders or those who don’t want to carry large amounts of cash when traveling.
Traditional payment methods like credit cards and cash are unlikely to be replaced by cryptocurrencies anytime soon, Mr Kongsak said.
But if the Bank of Thailand leaves the door open to digital currencies as a payment option, the country could avoid incidents like earlier this year when Russian tourists in Thailand were unable to pay for goods or services, he said.
At the initial stage of financial sanctions against Russia, some tourists quickly encountered problems with transactions in Thai hotels.
The THA and Russian authorities solved the problem by switching to other payment methods since the use of cryptocurrency is banned in Thailand.
Mr Kongsak said cryptocurrency could be an interesting alternative payment method, but some tourism businesses are reluctant to accept it, worried about its high volatility.
Proud Limpongpan, co-founder and chief marketing officer of digital exchange operator Zipmex Thailand, said the strict cryptocurrency rules are unfortunate for industries like tourism, as tightening regulation could deny those industries the ability to benefit from a digital asset payment system.
For example, she referred to a car show where people were allowed to pay for cars directly with cryptocurrency. However, after the SEC regulations were introduced, customers must now first liquidate their cryptocurrency and use fiat money for payment, which is cumbersome.
Ms Proud said Zipmex previously planned to work with Central Group to launch a crypto debit card service that would allow customers to pay for goods with cryptocurrency, but that is now impossible under the new regulations.
However, Zipmex will continue to roll out the service in areas where cryptocurrency payments are legal, such as Hong Kong and Australia, she said.
Ms Proud said Thailand’s digital asset industry may grow more slowly due to the strict controls.
She understands regulators want to protect investors, but said strict regulations will make Thailand unattractive to foreign investors looking to pour money into the digital assets space.
“Normally, as a licensee, a regulator should trust us to do business with transparency,” Ms Proud said.
Zipmex operates in four countries – Australia, Thailand, Indonesia and Singapore – and plans to continue expanding into new markets in Asia Pacific.
The company plans to soon launch its own Visa-branded payment card, giving 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 banned by the SEC, which he said was unfortunate as some of them could have contributed to Thailand’s economic recovery.
Mr Atthakrit said the company previously planned to launch a service that would allow tourists to use cryptocurrency as a payment method in Thailand.
The service would have eased the payment process for visitors using cryptocurrency and would have attracted more tourists to Thailand in the upcoming high season, he said.
Voralak Tulahorn, chief marketing officer of The Mall Group Co, one of the country’s leading department store chains, said it wouldn’t be a big deal if cryptocurrencies weren’t allowed for payment in retail stores.
She said her company already provides shoppers with various payment methods in its retail complexes and uses a variety of marketing campaigns to attract consumers.
“Cryptocurrency is a global trend and The Mall launched a campaign related to non-fungible tokens to educate customers while trying to gain access to the crypto nomads living here,” Ms. Voralak said.
“If cryptocurrencies are not allowed to be used as a means of payment, we will follow the government’s rules and do not believe this will impact the entire retail business.”
ONE SIZE DOESN’T FIT ALL
Karndee Leopairote, Chair of the Executive Committee of DigitaLife Corporation and Executive Vice President of FutureTales Lab, said she supports the ban on cryptocurrencies as a means of payment to maintain the stability of the country’s overall economic and financial system.
Ms Karndee said regulators shouldn’t apply blanket rules to digital assets going forward, as they aren’t a single asset, but can be broken down into multiple types or subsets.
Nor should enforcement of rules be done on a one-size-fits-all basis, she said.
Developing regulations for digital assets should start with an intention to support innovation development, not with an idea of how to ban their use, Ms Karndee said.
The use of digital assets for utility, investment, and payment has increased globally, particularly among Gen Z and Millennials.
The younger generations, especially young professionals, can build their wealth by investing in digital assets, she said.
Dusida Worrachaddejchai and Pitsinee Jitpleecheep