Ban in Thailand Adds to Growing Backlash Against Crypto Payments

Thailand Ban Adds to Crypto Payments Backlash

Thailand has announced a ban on using cryptocurrencies as a means of payment, joining a growing number of countries, including India, Indonesia and Turkey, that are limiting the use of digital assets to investments or are considering it. Others, most notably China, have banned crypto outright.

The Wednesday (March 23) announcement by Thailand’s Securities and Exchange Commission (SEC) gave just seven day’s notice before the ban goes into effect April 1. Digital asset service providers already using crypto for payments have until May 1 to comply.

See also: Thai Central Banker ‘Red-Lines’ Crypto Payments as Digital Baht Pilot Looms

The news follows an announcement earlier this year that Thai SEC, Bank of Thailand and Ministry of Finance were planning to limit the use of cryptocurrencies in payment for goods and services.

“Widespread adoption of digital assets as a means of payment for goods and services poses risk to the country’s economic and financial system,” Bank of Thailand Governor Sethaput Suthiwartnarueput said in the Jan. 25 announcement.

The Thai SEC used much the same language Wednesday, citing crypto as a threat to financial stability and useful tool for money laundering that also brings risks to the public, including price volatility, cyber theft and personal data exposure. It also pointed to the lack of a regulatory or security framework, as well as the potential to confuse consumers by providing too many payment systems.

The markets regulator said providers may “not provide services or act in a manner that encourages or promotes the payment of goods and services with digital assets.” This includes advertising such services to merchants or providing digital wallets usable in that fashion.

The Thai SEC added that multiple payments rails could make the overall cost of payments higher — which is a somewhat novel concern for digital assets bringing increased competition to the field.

Growing Backlash

The backlash against crypto payments has been growing for some time, pushing ahead a growing interest in central bank digital currencies (CBDCs) around the world.

Read also: To Fight Crypto Competitors, More Central Banks Eye Digital Currencies of Their Own

In the U.S., this has taken the form of an attempt to reign in stablecoins, placing them under the purview of regulated, insured banks.

See also: Treasury Under Secretary Adds FedNow to Stablecoin vs Digital Dollar Debate

Turkey was the first major economy to ban crypto payments, dropping the hammer April 30, 2021, with its central bank citing the risk of non-recoverable losses due to the lack of regulation, volatility and criminal use, as well as the potential for digital wallets to be stolen and used for “irrevocable” transactions.

Read more: Bitcoin Plummets on News of Turkey’s Ban on Crypto Payments

Two months later, Bank Indonesia’s governor, Perry Warjiyo, banned cryptocurrencies’ use in payments and “other financial services tools,” saying they are not legal payment instruments. That came as the country engaged in a broader crackdown on cryptocurrency trading iafter the predominantly Muslim nation’s top Islamic scholarly body ruled that cryptocurrencies are banned under Sharia law because of the gambling-like nature of crypto investing.

See more: Indonesia Central Bank Among Latest to Ban Crypto as Payment

India’s government has already made it very clear that it intends to ban crypto payments, despite relenting on earlier indications that a full crypto ban was forthcoming. Last week, the Reserve Bank of India (RBI) said that private currencies have historically caused financial instability, so taking such a “step back … cannot be taken simply because technology allows it.”

Read more: Announcing Crypto Trading Tax and Digital Rupee Plans, India Makes Clear Payments Are Out

Beyond that, the government of Prime Minister Narendra Modi has cited sovereignty issues, with RBI noting that most cryptocurrencies are priced in terms of U.S. dollars, giving them unfair leverage over currencies in emerging markets, Cointelegraph reported.

More broadly, India’s strict new tax on cryptocurrencies is expected to pass Thursday (March 24), CoinDesk said. That will impose a 30% capital gains tax on crypto transactions with no provision for declaring losses.