Bangkok, THAILAND – Last Wednesday, the Bank of Thailand announced that it would be allowing local banks to set up subsidiaries for dealing with cryptocurrencies. The move comes on the back of Thailand’s release of comprehensive laws to govern cryptocurrencies and initial coin offerings (ICOs) last month and is just the latest in a string of cryptocurrency-related regulatory moves which have had the effect of spurring in the nascent industry. One of the biggest bugbears of cryptocurrency companies is the inability to obtain access to traditional banking services. According the to the regulatory announcement published by the Thai central bank on August 1, Thai banks can now not only do business with cryptocurrency companies through their subsidiaries, they can also issue digital tokens, provide cryptocurrency brokerage services, run cryptocurrency-related businesses in their own right and invest outright in cryptocurrencies through their subsidiaries.
But banks and other financial institutions, subject to existing banking regulations will not be allowed to partake of the cryptocurrency cake and are still banned from dealing directly with cryptocurrencies. The restriction is helpful as it insulates the traditional banking and finance sectors from the volatility inherent in cryptocurrency markets whilst still allowing an avenue for a rapidly expanding cryptocurrency market to grow.
For banking subsidiaries who are able to establish cryptocurrency-dealing branches, these branches are however still restricted from offering cryptocurrency-related services to existing customers and the public and restricted to businesses which are approved by the Thai Securities and Exchange Commission and the Office of Insurance Commission. Bank subsidiaries are also barred from dealing with individuals, which presents another hurdle for the growing ranks of crypto-affluents who still have limited access to banking services.
Thailand stands out as the only Southeast Asian nation with comprehensive cryptocurrency laws, but the clarity in regulation has been a double-edged sword in some instances, with the Bank of Thailand having released a circular earlier this year prohibiting banks in Thailand from investing and trading in cryptocurrencies or running cryptocurrency exchanges. Nevertheless, a regulatory sandbox does exist for Thai bank subsidiaries that want to expand the quality of financial services and their offering, which would include dabbling in cryptocurrencies.