Thailand’s plan to introduce a crypto payment sandbox for tourism may face resistance from the central bank, which has long prohibited such transactions. Despite support from industry leaders, concerns over financial stability and regulatory issues loom large.
Over the weekend, the Chief Executive Officer of Thailand’s leading crypto exchange enthusiastically put his support behind a move to introduce a sandbox or hotspot in Thailand where cryptocurrency funds could be used for property and other payments. The proposal comes in the wake of an address at a Pheu Thai Party seminar in Hua Hin on December 13th, when the idea was floated by former Premier Thaksin Shinawatra as a way to boost liquidity in the economy.
In addition, the whole ethos and raison d’être for such currencies goes against the country’s present moves to comply with Organisation for Economic Co-operation and Development (OECD) programs aimed at tax justice and global governance.
Thailand’s leading crypto entrepreneur backs plans for pilot crypto payment projects in Hua Hin or Phuket
One of Thailand’s top young business leaders has enthusiastically endorsed the Pheu Thai figurehead’s proposals for a sandbox or pilot project related to the acceptance of cryptocurrency payments in Thailand. This came following the Pheu Thai Party seminar in Hua Hin addressed by Thaksin Shinawatra on December 13th.
Afterwards, it was reported that the Ministry of Finance has been instructed to look at a pilot or sandbox aimed at boosting “crypto tourism” in either Hua Hin or Phuket. Thirty-four-year-old Jirayut Srupsrisopa, or “Top,” is well known in Thailand as the charismatic head of the country’s most successful crypto exchange, Bitkub.
The company is regulated and overseen by the Securities and Exchange Commission (SEC) and dominates the market in Thailand. In addition, Mr. Jirayut is well-known in government circles. He is reportedly close to former Prime Minister Srettha Thavisin and various sides of Thailand’s political spectrum. He is a regular visitor to Davos and a participant in World Economic Forum (WEF) activities. Certainly, Mr. Jirayut is a fervent advocate for Thailand to embrace both digital currencies and blockchain technology.
Regulatory hurdles and global potential highlight the mixed prospects of Thailand’s crypto tourism plans
Nonetheless, the proposal from Mr. Thaksin faces hurdles. Despite its support from one of the country’s most successful young entrepreneurs, it conflicts with a regulatory block on the use of cryptocurrencies for payments in Thailand.
This restriction was imposed by the central bank three years ago. Previously, Bank of Thailand Governor Sethaput Suthiwartnarueput described cryptocurrency payments as a potential threat to Thailand’s financial stability.
On the other hand, this weekend Mr. Jirayut highlighted the opportunity. He emphasized the global market for crypto expenditures, which is valued at $4 trillion.
In short, there is a growing number of digital nomads who, as a lifestyle choice and on principle, refuse to engage with fiat currencies.
These wealthy digital nomads use cryptocurrencies as an expression of liberty and freedom. The young Thai entrepreneur, whose firm was one of Thailand’s first unicorns, highlighted the success of a similar scheme in Dubai.
Top explained that a carefully controlled pilot could act as a portal for new capital inflows and liquidity into Thailand’s cash-starved economy. In particular, the young businessman said it might eliminate the need for further government borrowing or fiscal stimulus, which has expanded public debt.
“No one wants to sell their crypto in the desert,” he declared. “They want to sell in beautiful places like Thailand. By removing this tax, we can encourage capital inflows.”
Leveraging the global crypto market could ease Thailand’s debt burden while drawing foreign capital inflows
“Direct government spending through budget allocations or borrowing only adds to the debt burden,” Mr. Jirayut said. “Leveraging the existing crypto market provides an opportunity to attract ‘free money’ without incurring new debt obligations.”
Certainly, this proposal aligns with similar initiatives worldwide, for instance, in Dubai.
Presently in the United Arab Emirates state, users can load stablecoins onto a virtual debit card. Afterwards, the funds can be used anywhere in the economy. This service is provided by Singapore-based payment gateways Kast and Alchemy. Payments can be effected in US dollars and UAE dirhams.
Similar benefits can also be achieved with both Visa and Mastercard credit and debit cards.
In addition, other experiments are currently being conducted. For instance, in Buenos Aires, Argentina’s capital, over 130 firms accept direct cryptocurrency payments. Crypto is also widely accepted in Zug, an affluent canton in Switzerland with an international population. At the same time, another pioneering test is underway in San Francisco.
Dubai’s crypto tax incentives offer insights into how Thailand might attract significant inward liquidity flows
In particular, the experiment in Dubai stands out. The city-state has scrapped capital gains taxes on crypto income once converted into local currencies. Certainly, such a concession in Thailand would be a portal for inward liquidity flows.
This aspect of the plan, in particular, was highlighted by Jirayut Srupsrisopa, or Top. Furthermore, he noted that Bitkub was already in place to facilitate such a test. Moreover, it is already known to Thai authorities and regulated by the Securities and Exchange Commission (SEC) and the Ministry of Finance.
Top especially noted the present dearth of inward investments at significant levels into Thailand. For instance, he mentioned the uphill battle of businesses raising money through the Stock Exchange of Thailand (SET).
“There’s no need for additional deficit spending or fiscal stimulus measures,” he outlined. “We can simply attract capital from the global crypto market into the Thai economy.”
“Fundraising through the Stock Exchange of Thailand is currently facing challenges,” he noted. “The crypto market offers a vast pool of global capital that can be channelled into Thai projects.”
Lessons from El Salvador’s bitcoin experiment raise concerns over potential risks to Thailand’s economy
However, not all that glitters is gold. A 2021 experiment by El Salvador, which recognized Bitcoin as legal tender, did not particularly drive up investment into that country’s troubled economy.
Launched by then-41-year-old President Nayib Armando Bukele Ortez in 2021, the program saw the government purchase Bitcoin. Some days ago, the country’s holding was worth $594 million, a gain of ฿150 million.
At the same time, a government Bitcoin office was established. Furthermore, the country launched a Bitcoin wallet called Chivo.
Certainly, the initiative gained attention. Some Salvadorans credit it with boosting their businesses, while many bemoaned the troublesome nature of the country’s digital wallet.
Significantly, the wallet now faces either privatization or liquidation.
This came as a condition of an agreement with the International Monetary Fund (IMF), which advanced it with a loan of $1.4 billion. The deal, announced four days ago, must still be approved by the IMF board in Washington, DC.
However, El Salvador’s cryptocurrency foray is to be scaled back. In short, it was seen by the IMF as a dangerous risk to its economy.
Nonetheless, the government of El Salvador insists that it will hold onto its crypto reserves and that the Chivo wallet may be bought by a private firm.
IMF’s stance on cryptocurrency highlights potential risks and cautionary lessons for Thailand’s plans
The International Monetary Fund (IMF), however, was clear in its statement afterwards.
“The potential risks of the Bitcoin project will be diminished significantly in line with Fund policies,” the IMF announcement said. “Legal reforms will make acceptance of Bitcoin by the private sector voluntary. For the public sector, engagement in Bitcoin-related economic activities and transactions in and purchases of Bitcoin will be confined.”
Certainly, this is a more flexible position to that taken by Thailand’s central bank in 2021 and 2022. Indeed, it strictly prohibited cryptocurrencies from being used for payment purposes.
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At the same time, the cryptocurrency hotspot proposal certainly also contradicts the kingdom’s current policies aligned with its Organisation for Economic Co-operation and Development (OECD) membership, which emphasizes tax justice and global accountability.
Undeniably, cryptocurrencies are seen as fundamentally opposed to world governance. Indeed, the idea is to boost individual liberty and help free people from big government.
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