Thailand will now permit the operation of virtual banks for the first time. The Bank of Thailand, the country’s central bank, announced intentions to introduce virtual banks as the administration seeks to increase competition.
Following their launch, the Bank of Thailand intends to place the virtual banks in a limited phase for several years.
The Bank of Thailand revealed in a “Consultation Paper on Virtual Bank Licensing Framework” that the application to allow virtual banks to provide financial services would be available later in 2023.
While the application is open in 2023 Q1, ten parties have expressed interest in applying for the permits. All qualified applicants must meet specific requirements, as previously stated. Meanwhile, the central bank announced that three licenses will be issued in 2024, with the entire operation beginning in 2025.
Traditional commercial and virtual banks in Thailand will be subject to the same regulations and supervision under the licensing framework. The central bank stated that Virtual banks should not start a race to the bottom through irresponsible lending. It should give preferential treatment to related parties or abuse dominant market positions that endanger financial stability, depositors, and consumers.
What Will These Virtual Banks Bring to Thailand?
This measure intends to boost competitiveness and contribute to Thailand’s economic growth.
Furthermore, virtual banks will offer lower-cost services to new clients who are currently underserved, benefiting all customers.
Traditional commercial banks are subject to the same rules and regulations as virtual banks, and virtual banks may offer the same banking services as traditional commercial banks.
The country’s Securities and Exchange Commission recently announced its intention to impose stricter crypto rules to protect investors better. Following the demise of FTX, many governments around the world are reviewing and tightening crypto laws in their respective jurisdictions. Aside from the currency crash, Thai SEC representatives mentioned the failures of Celsius Network, Zipmex, Three Arrows Capital, and TerraUSD.
In 2022, the country witnessed several cryptocurrency-related events, including plans to test a digital currency issued by the central bank for around 10,000 users.
Furthermore, at the end of last year, the country signed a technical memorandum of understanding with Hungary intending to facilitate the use of blockchain technology.
As a result of the agreement, the two countries will discuss their experiences, identify areas of potential collaboration that may be fruitful, and use the best methods available to develop and deploy cutting-edge infrastructure for both countries’ financial sectors, such as cryptocurrency.
Thai SEC Tightens Rules for Crypto
Thailand is the latest country to seek to revise its crypto regulations in the aftermath of the FTX collapse. Like most countries, it intends to tighten industry guidelines and focus on investor protection.
Thailand Securities and Exchange Commission (SEC) is preparing stricter regulations on digital assets. To mirror the global market, SEC representatives reportedly nodded to the failures of FTX, Three Arrows Capital, Celsius Network, Zipmex, TerraUSD, and a local exchange, to justify such a decision.
The regulators also expressed concern about recent trends in cryptocurrency. Advertising particularly the use of influencers to deliver the message. It could have misled the audience into taking risks. They identified the digital asset industry as vulnerable and in need of regulation.
The SEC identified investor protection. Control over crypto advertising, conflict of interest prevention, and cybersecurity as the critical areas for its efforts. It has formed a working committee composed of government officials and private stakeholders. The committee will assess and prepare relevant amendments to existing regulations.
It’s worth noting that this is not the first time the Thai SEC has acted on crypto advertising standards. It required market participants to provide clear investment warnings to consumers in September.
The SEC held a public hearing in December. Its initiative is to prohibit crypto platforms from providing or supporting digital asset depository services. The potential prohibition of all staking and lending services to protect traders and the general public.
One of the largest local platforms in Thailand, Zipmex, was hit by a wave of bankruptcies in the crypto business. Withdrawals got halted in July due to a “combination of circumstances beyond its control.” The SEC charged Zipmex and its co-founder Akalarp Yimwilai with violating local laws and referred the case to the police.
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