Bank of Thailand warns against use of baht-denominated stablecoin

The central bank of Thailand has issued a warning against the illegal use of a new baht-denominated stablecoin, which bank officials said could expose users to cyber theft without legal protection.

The Bank of Thailand has labeled Thai baht-denominated stablecoins as a threat to the stability of the country’s currency infrastructure. The BOT took specific aim against the baht stablecoin THT created on the South Korean cryptocurrency platform Terra in a media release on Wednesday.

According to a Thai official, the country’s central bank expects to impose new regulations on asset-supported stablecoins this year, following a warning against the use of a new baht-denominated stablecoin.

No legal safety nets

“The general public should exercise caution and avoid participating in any activity involving THT, as there are no legal assurances or protection, and users could also be at risk of cyber theft and money laundering,” MarketScreener quoted the central bank as saying.

BOT considers any activity involving THT as “illicit” on the basis of the creation, issuance, and usage or circulation of any material or token for money infringe on Section 9 of Thailand’s Currency Act of 1958, CoinDesk reported.

The policies will not cover those without asset backing like Bitcoin or Ethereum, and investors will have to take their own risks, assistant governor Siritida Panomwon Na Ayudhya told a briefing.

BOT permission required

According to CoinDesk, any person can issue a proposal on Terra’s algorithmically operated platform in order to mint new digital tokens that are later decided upon by stakers holding the platform’s native luna token.

Siritida said service providers of baht-supported stablecoins require the BOT’s authorization as they may be deemed electronic money (e-Money), and the central bank oversees risks connected with an electronic currency like settlement and money laundering.

Do Kwon, director of Terraform Labs, tweeted that Terra does not initiate proposals, nor does it ever vote on them. “I think it is a very interesting development and we’re able to catch the attention of a central bank,” Kwon said in remarks quoted by CoinDesk.

 

Image courtesy of Cointelegraph News/YouTube 

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