Bangkok Bank has become the first domestic financial institution to halt transactions involving trading of cryptocurrencies with the Thai Digital Asset Exchange on the grounds that TDAX's business operations are not in accordance with its business purpose registered with the Commerce Ministry.
TDAX, a privately owned Thai exchange for the trading of digital assets, registered its business with the Commerce Ministry's Business Development Department as a digital currency business upon receiving an operating licence, said TDAX founder and chief executive Poramin Insom.
"The bank called and asked whether there was an operating licence for proof, but I answered that this business was not under legal jurisdiction [hence the absence of an operating licence], so the bank said it would terminate the company's bank account [with Bangkok Bank], as this business had no licence," Mr Poramin said.
Termination of TDAX's bank account with Bangkok Bank has not affected trading of bitcoin and 10 other cryptocurrencies, he said.
"Daily trading value remains normal, driven by demand from investors for digital currencies, and investors are able to conduct transactions with three other banks, namely Kasikornbank (KBank), Siam Commercial Bank and Krungthai Bank," Mr Poramin said.
Regarding the Bank of Thailand's announcement last week asking for cooperation from financial institutions to not involve themselves in cryptocurrency-related transactions, the move stems from how a prohibition is imposed in the US on trading cryptocurrencies via banking credit cards, he said.
TDAX has 5.5 million baht worth of registered capital and plans to increase capital soon in order to apply for an initial coin offering (ICO) licence with the Securities and Exchange Commission (SEC), Mr Poramin said.
Meanwhile, an informed source at Bangkok Bank said TDAX had opened a savings account at the bank, but bank officials noticed that some documents had not been given yet, therefore the bank decided to block all transactions through the account after the central bank asked for cooperation from banks to avoid involvement in cryptocurrency transactions.
TDAX had also asked to close the account by itself, the source said, adding that the bank has no mandate to force customers to open or close any account.
KBank said in a release that the bank is still facilitating TDAX financial transactions through its account after the bank discussed the matter with the central bank and found that such an account is not regarded as supporting customers in making virtual currency transactions.
However, KBank is waiting for the SEC's clear-cut regulations governing ICOs, the bank said.
Separately, SET-listed Project Planning Service Plc (PPS), a construction project management company, on Monday is poised to become Thailand's second listed firm after Jay Mart to raise funds from an ICO offering, issuing a digital token called Procoin.
An ICO source said there have been several press conferences on ICO offerings recently because companies want to accelerate their ICO offerings before the SEC's regulatory framework comes into effect, given that such regulation does not have a retroactive effect.