BoT concern over use of digital assets to make payments

BoT concern over use of digital assets to make payments

A customer pays for a meal at Lim Lao Ngow, a noodle shop in Siam Square One, with Bitcoin. (Photo: Pawat Laopaisarntaksin)
A customer pays for a meal at Lim Lao Ngow, a noodle shop in Siam Square One, with Bitcoin. (Photo: Pawat Laopaisarntaksin)

The Bank of Thailand is concerned about the use of digital assets to pay for goods and services because of their price volatility.

Using digital assets as payment for goods and services has become a growing trend.

Digital assets are associated with high price volatility and risks of cybertheft, personal data leakage and money laundering. This could be detrimental to merchants, businesses and consumers, said Chayawadee Chai-Anant, the central bank's senior director of corporate communications.

If digital assets become widely used as a means of payment for goods and services, such risks could affect payment system stability, financial stability and consumer protection, she said.

Means of payment under the central bank's definition covers ubiquity, store of value and trust.

The central bank is not concerned about investment in digital assets, as investors accept risk in that case, Ms Chayawadee said.

Payment for goods and services via digital assets is not illegal. In addition, the central bank does not prohibit commercial banks' involvement in digital assets through their subsidiaries. But the banks may shoulder a higher cost of risk management through higher risk provision, she said.

The central bank does not agree commercial banks will get involved in risky digital assets directly, as commercial banks need to take care of depositors, Ms Chayawadee said.

The central bank, in coordination with the Securities and Exchange Commission and other agencies, is considering guidelines to regulate the usage of digital assets as a means of payment for goods and services to limit risks.

Priority will continue to be placed on the use of technology to promote financial innovation, enhancing the efficiency and security of payment systems, and safeguarding the stability of the overall economic system, she said.

The central bank has been formulating a consultation paper of the future financial landscape, including digital assets. The paper is expected to take shape in the first quarter of next year, said Ms Chayawadee.

Sakkapop Panyanukul, senior director of the economic and policy department, said the central bank is not concerned about all aspects of digital assets. Its greatest concern is blank coins, which are not backed by any asset, he said.

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