Deputy Prime Minister Somkid Jatusripitak has asked the central bank to keep a close eye on bitcoin to prevent potential fraud involving the cryptocurrency.
"I've asked the Bank of Thailand to help prevent using bitcoin as a tool in money laundering and to study how to develop [the digital currency] in case it turns out to have benefits one day," Mr Somkid said after a meeting with central bank officials. "No one knows how bitcoin will develop. The central bank agreed, saying it is impossible to get rid of [bitcoin]."
In Thailand, bitcoin has seen limited use and the digital currency will not replace traditional currency, he said.
Following the wild swings seen in bitcoin's trading value, especially over the last two months, Prime Minister Prayut Chan-o-cha instructed the Finance Ministry to educate people about the risks of bitcoin investment.
The Bank of Thailand, the Securities and Exchange Commission, the Finance Ministry and the Anti-Money Laundering Office have agreed to set up a working panel tasked with considering potential measures for handling problems that the digital currency may cause.
Bank of Thailand governor Veerathai Santiprabhob a few weeks ago raised a warning flag on cryptocurrencies, saying they are not legal tender and as such should not be used as currency.
The central bank, however, has not decided to regulate cryptocurrencies thus far, because bitcoin usage is not so widespread in Thailand that the void in regulation could result in risks to the financial system and to people involved in trading bitcoin.
In related news, Mr Somkid said the baht run-up was another topic discussed at the meeting.
Given that Thailand has solid financial fundamentals, both direct and portfolio investments have flooded into the country, he said, adding that such fund inflows are not particular to Thailand, as seen by the rally in Asian stock markets.
The baht and other currencies in the region are appreciating as a result.
"Several people have requested measures to weaken the baht," Mr Somkid said. "The central bank's role nowadays is to stabilise the currency. As such, care must be taken, as deemed appropriate, in the instance of irregular movements, but not in the form of direct intervention."
The baht is the biggest gainer in Asia so far this year, up 1.2% against the US dollar.