Thailand SEC bans crypto payments, seeks disclosure of system failure from exchanges

In an ongoing effort to carve out a regulated crypto market for the general public, the Thailand Securities and Exchange Commission (SEC) announced a ban on the use of cryptocurrencies for payments. Parallelly, the Commission proposed a new rule that demands disclosure of service quality and IT usage information from crypto businesses including brokers, exchanges and dealers.

According to the notice issued by the Thai SEC, businesses in the region have been advised against accepting crypto payments from April 2022 after discussing its implications with the Bank of Thailand (BOT).

The joint study conducted by the BOT and SEC concluded that:

“[Crypto payments] may affect the stability of the financial system and overall economic system including risks to people and businesses.”

Some of these risks highlighted by the SEC include loss of value caused by price volatility, cyber theft, money laundering and personal data leakage. Once implemented, businesses in Thailand will be barred from — advertising accepting crypto payments and establishing systems, tools and wallets to facilitate crypto transactions. 

Businesses found in noncompliance with the new crypto laws will be subject to legal actions including temporary suspension or cancellation of the services:

“However, the BOT and the SEC, as well as other government agencies, recognize the benefits of technologies behind digital assets such as blockchain and value and support the use of technology to further innovation.”

Moreover, the Thai SEC proposal aims to further ensure investor security by gauging the quality of the services delivered by the crypto businesses. According to a rough translation, the SEC’s proposes digital asset operators to:

“Prepare and deliver [service quality and system capacity utilization reports] to the SEC office on a monthly basis within the 5th day of the following month.”

In addition to sending monthly reports to the Thai SEC, the proposal also directs crypto businesses to disclose the reports on their official website within the same timeline. 

A graph shared by the SEC further highlighted various complaints received over the past 12 months related to system failure, services that do not meet the desired conditions, shopping and others. Based on the data, Thai investors faced the highest problems related to shopping, which might be one of the main reasons for the crypto payments ban. 

As Cointelegraph previously reported back in Dec 2021, the government of Thailand confirmed working on preparing a new regulatory framework by defining “red lines” for the crypto industry.

Related: Thailand reportedly exempts 7% crypto tax for traders on authorized exchanges

In the first week of March, the finance ministry of Thailand had reportedly eased up crypto tax regulations in an effort to promote digital asset investments.

According to a Cointelegraph report on the matter, the new tax policy exempts crypto traders from the 7% value-added tax (VAT) when trading on authorized exchanges. In addition, the revised tax policy will also allow traders to offset their annual losses against gains for their crypto investment across multiple digital assets.