The Looming Threat of Private Stablecoins
The Bank of Thailand (BOT) has taken a firm stance against privately issued stablecoins, particularly Thai Baht Digital (THT), which is tethered to the national currency. As per a Bangkok Post article from March 18, the central bank has cautioned the public that THT lacks any legal backing, which could expose users to cybersecurity threats and potential money laundering.
A Blast from the Past: Currency Act of 1958
Pruettipong Srimachand, assistant governor of the BOT’s legal group, referenced a law that is older than some of our parents. He exclaimed, “The creation, issuance, usage, or circulation of any material or token for money is a violation of Section 9 of the Currency Act 1958.” If that doesn’t give you chills, we don’t know what will!
What’s a Stablecoin Anyway?
For the uninitiated, stablecoins are the well-behaved children of the crypto family—they aim to maintain a stable value by being pegged to traditional currencies. THT is a product of the Terra platform, which has birthed various other stablecoins, with varying degrees of success.
Potential Pitfalls: Fragmentation of the Currency System
One of the central bank’s primary concerns is that THT could stir the pot of the Thai economy, potentially undermining the established currency system. According to Mr. Pruettipong, “Such usage would ultimately affect the general public’s confidence in the stability of the national currency system, which is the cornerstone of all economic activities.” In layman’s terms: your confidence in the Thai Baht might just plummet quicker than a lead balloon.
Lessons from China’s CBDC Playbook
Thailand’s government has expressed a similar sentiment to the Chinese authorities, asserting that only stablecoins issued by the central bank will get the green light. While they are at it, China is revving up its efforts to roll out a Central Bank Digital Currency (CBDC), with testing expected ahead of the 2022 Winter Olympics. If there’s one race they’re winning, it’s the race for control over digital currencies.
Thailand’s Road to a National CBDC
In light of these developments, the Bank of Thailand has ramped up its own research into launching a national CBDC. The BOT is collaborating with the Hong Kong Monetary Authority, the Central Bank of the United Arab Emirates, and the Digital Currency Institute of the People’s Bank of China. The stakes are high, but so are the potential rewards—an organized digital economy could reshape Thailand’s financial landscape as we know it.
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