Although Thailand has banned the use of digital assets to pay for goods and services, some organisations think they may still be used as a future alternative currency.
The Federation of Thai Industries (FTI) believes cryptocurrency may become an alternative currency, to be used alongside physical money, with the Russia-Ukraine war boosting the prospects of digital assets becoming a medium of exchange.
The federation has encouraged entrepreneurs to take a closer look at cryptocurrency to find out whether it can become a new channel of payment, but the risks of using this digital cash, which is detached from state financial systems, is a concern, said Kriengkrai Thiennukul, vice-chairman of the FTI.
Thailand’s Securities and Exchange Commission (SEC) banned the use of digital assets for the purchase of goods and services, effective from April 1, citing concerns over the country’s financial stability, risks of cybertheft, and losses from currency volatility.
The rules are based on joint discussions between the SEC and the Bank of Thailand over the benefits and risks of digital assets.
Cryptocurrencies such as Bitcoin, Ethereum and Solana quickly increased in value after Russia invaded Ukraine in late February. The war led to Western sanctions, including the removal of some Russian banks from the international payments system SWIFT, and a US import ban on Russian oil, coal and liquefied natural gas.
As Russia’s financial transactions with foreign countries were greatly limited, alongside the collapse in value of the ruble, cryptocurrencies moved into the spotlight, offering a new way of transferring money and making payments.
The Russian government looked again at cryptocurrency, after years of not supporting the domestic use of it.
The government had previously banned the mining of cryptocurrency in Russia and prohibited cryptocurrency from entering into digital circulation.
“The war made cryptocurrency more popular. Russia redefined it as a currency rather than treating it as a digital asset,” said Mr Kriengkrai, who is also chairman of the Thai-Russian Business Council.
“Some countries began to consider following Russia, making it a possibility that cryptocurrency may become a global currency.”
With the sanctions still in effect, cryptocurrencies can solve payment problems between Russia and its trading partners, he said.
Though the SEC remains pensive and maintains its ban on the use of digital assets for goods and services payments, the FTI believes Thailand should not miss an opportunity to follow the cryptocurrency trend.
The manufacturing sector is studying what will happen if cryptocurrency replaces key 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 whether it can provide a new channel for doing business with foreign countries,” said Mr Kriengkrai.
The federation is also planning to team up with the Stock Exchange of Thailand to jointly organise a course to educate entrepreneurs about cryptocurrency.
“We are discussing a programme, which is still unclear at this stage,” he said.
Kongsak Khoopongsakorn, president of the Thai Hotels Association’s (THA) southern chapter, said cryptocurrency is considered an alternative payment method for operators and can be used by digital asset holders or those who do not want to carry large amounts of cash while travelling.
Traditional payment methods such as credit cards and cash are unlikely to be replaced by cryptocurrency anytime soon, said Mr Kongsak.
But if the Bank of Thailand leaves the door open for digital currency as a payment option, the country might be able to avoid incidents such as earlier this year when Russian tourists in Thailand were unable to pay for good or services, he said.
In the early stages of financial sanctions against Russia, some tourists quickly encountered problems with transactions at Thai hotels.
The THA and Russian authorities dealt with the issue by switching to other payment methods, as the use of cryptocurrency is prohibited in Thailand.
Mr Kongsak said cryptocurrency could be an interesting alternative payment method, but some tourism operators are hesitant to accept it as they are worried 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 because the regulatory tightening may deny these industries the chance to capitalise on a digital asset payment system.
For example, she referred to a motor show at which people were allowed to directly pay for cars with cryptocurrency. However, after the SEC regulations were imposed, customers now must first liquidate their cryptocurrency 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 this is now impossible under the 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 because of the strict controls.
She understands regulators want to protect investors, but said the harsh regulations will make Thailand unattractive to foreign investors who seek to put money into the digital asset space.
“Normally, a regulator should trust us as a licensee to do business with transparency,” Ms Proud said.
Zipmex operates in four countries — Australia, Thailand, Indonesia and Singapore — with plans to expand further into new Asia-Pacific markets.
The company plans to launch soon its own Visa-branded payment card that will give cardholders the freedom to convert their digital assets to fiat currency and spend anywhere that accepts Visa, she said.
Atthakrit Chimplapibul, chief executive of Bitkub Online, said the company has halted all activities prohibited by the SEC, which he said was unfortunate as some of them could have aided the Thai economic recovery.
Mr Atthakrit said the company previously planned to launch a service to allow tourists to use cryptocurrency as a payment method in Thailand.
The service would have facilitated the payment process for visitors holding cryptocurrency and attracted more tourists to Thailand in the upcoming high season, he said.
Voralak Tulaphorn, chief marketing officer of The Mall Group Co, one of the country’s leading department store chains, said it was no big deal if cryptocurrency was not allowed for payment at retail stores.
She said her company already makes available various payment methods to shoppers at 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 also trying to access crypto nomads living here,” said Ms Voralak.
“If cryptocurrency is not allowed for use as a payment, we will follow the government’s rules and we don’t think it will impact the overall retail business.”
ONE SIZE DOES NOT FIT ALL
Karndee Leopairote, chairwoman of the executive committee of DigitaLife Corporation and executive vice-president at FutureTales Lab, said she supports the prohibition of cryptocurrency as a means of payment to maintain the country’s overall economic and financial system stability.
Ms Karndee said regulators should not impose future rules on digital assets on a blanket basis, as they are not one single asset, but can be divided into several types or subsets.
Rule enforcement should also not be on a one-size-fits-all basis, she said.
Developing digital asset regulations should begin with the intention of supporting innovation development, rather than the notion of how to prohibit its usage, said Ms Karndee.
The use of digital assets for utility and investment as well as a means of payment has been growing worldwide, particularly amongst Generation Z and millennials.
The younger generations, especially first-time workers, can build up their wealth from investment in digital assets, she said.
Dusida Worrachaddejchai and Pitsinee Jitpleecheep