Cryptocurrencies are not lawful currencies and are not considered legal tender in Thailand.[1] Instead, cryptocurrencies and other digital tokens are deemed “digital assets” by the Royal Decree on Digital Asset Business, which took effect on May 14, 2018. Digital assets may be issued, traded, and exchanged through digital assets business operators, who are governed and licensed by the Thai Securities and Exchange Commission (SEC) through the Royal Enactment on Digital Asset Businesses (REDA), which also took effect on May 14, 2018.[2] Buying and selling cryptocurrencies had previously been banned in Thailand, although such ban was silently lifted on February 15, 2014.[3]
Currently, the SEC has approved Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), and Stellar (XLM) as tradable cryptocurrencies, as well as digital asset exchanges, broker, and dealers as licensed operators.[4] In exchange, new and existing crypto fund managers and investment advisors must apply for licenses to operate their businesses as of February 24, 2021, although local banks and financial institutions are still banned from direct dealings with cryptocurrencies. In fact, the February 12, 2018, circular issued by the BOT emphasized the clear delineation between cryptocurrency transactions and traditional bank businesses.[5] Likewise, crypto exchanges must promptly disclose user information whenever there are transfers of funds between firms, particularly information relating to know-your-customer (KYC) and suitability requirements.[6] In cases of initial coin offerings (ICOs), newly issued digital tokens must be approved by the SEC, accompanied by a draft prospectus, registered with all of the required materials, and issued through a portal approved by the SEC.[7]
For taxation purposes, any income produced by the trade or exchange of digital assets are subject to the general taxation principles outlined in the Royal Decree and Amendment of the Revenue Code of 2018. Digital assets are considered intangible assets with capital gains that are subject to a withholding tax of fifteen percent, applicable to both resident and nonresident individuals. In general, individual taxpayers must include such income on their annual returns, although the withholding tax will be creditable against their tax liability. On the other hand, there is no law specifying the withholding tax rate on capital gains from digital asset transactions made by corporate entities.[8]
On March 19, 2021, the Bank of Thailand (BOT) announced that it would be regulating foreign currency-backed, asset-backed, and algorithmic stablecoins that are not illegal moving forward. In fact, the BOT is still receiving comments and feedback on such regulations at this time. In contrast, those stablecoins without asset backing are to remain unregulated, leaving investors unprotected against any losses or bad actors for those transactions.[9]
On a separate note, the BOT is also in the process of developing a Retail Central Bank Digital Currency (CBDC) to meet the needs of the general public, improve service efficiency in the business sector, and increase access to financial services.[10] On July 16, 2020, the BOT entered into phase three of its CBDC development process and is already using such CBDC for financial transactions with a few large businesses.[11]
Beginning in September 2021, the Thai Anti-Money Laundering Office (AMLO) will begin requiring local digital exchanges to verify customer identities through a “dip-chip” machine requiring customer to be physically present before opening new cryptocurrency accounts or making new transactions. For transactions valued at 100,000 baht or more, contact information, date of birth, and place of residence, as well as evidence of identity, occupation, location of the workplace, and the name and signature of the person who carried out the transaction, must be recorded. Such customer information must be preserved for at least ten years. Professionals have an additional duty to report any suspicious transactions or those valued at 2,000,000 baht or more in cash.[12] Currently, every step is completed electronically. Forums such as the Thailand Digital Asset Operators Trade Association promote conversations among digital asset intermediaries, the SEC, and AMLO with regards to such regulations.[13]
P.S. Insights on Cryptocurrency Legal Issues
Most jurisdictions and authorities have yet to enact laws governing cryptocurrencies, meaning that, for most countries, the legality of crypto mining remains unclear.
Under the Financial Crimes Enforcement Network (FinCEN), crypto miners are considered money transmitters, so they may be subject to the laws that govern that activity. In Israel, for instance, crypto mining is treated as a business and is subject to corporate income tax. In India and elsewhere, regulatory uncertainty persists, although Canada and the United States are relatively friendly to crypto mining.
However, apart from jurisdictions that have specifically banned cryptocurrency-related activities, very few countries prohibit crypto mining.
Our Freeman Law Cryptocurrency Law Resource page provides a summary of the legal status of cryptocurrency for each country across the globe with statutory or regulatory provisions governing cryptocurrency. The globe below provides links to country-by-country summaries:
Is cryptocurrency legal in Thailand?
Do you have questions about cryptocurrency, digital currencies, or blockchain technology?
Freeman Law can help with digital currencies, tax planning, and tax compliance. Contact us now to schedule a consultation, or call (214) 984-3410 to discuss your cryptocurrency and blockchain technology concerns.
[1] Patcharaporn Pootranon, Veerakom Samranweth, Sompatsorn Liewpolvanit, A Comparison of Developments in Cryptocurrency Regulation, ABLJ, Weerawong C&P (March-April 2020).
[2] Aziz Abdel-Qader, Thailand Unveils New Registration Rules for Crypto Asset Managers, Finance Magnates (February 15, 2021).
[3] Arnab Shome, Thailand’s Central Bank Bans Banks from Dealing with Cryptocurrencies, Finance Magnates (February 12, 2018); Pugnatorius S.A. Overseas Advisors | Republic of Panama, Crypto Update.
[4] Kay Yong, Bunnasomboon Chaiparinya, Yukgrit Kantamanee, Crypto regulation in Singapore and Thailand, Asia Business Law Journal, law.asia (May 13, 2021).
[5] Aziz Abdel-Qader, Thailand Unveils New Registration Rules for Crypto Asset Managers, Finance Magnates (February 15, 2021); Patcharaporn Pootranon, Veerakom Samranweth, Sompatsorn Liewpolvanit, A Comparison of Developments in Cryptocurrency Regulation, ABLJ, Weerawong C&P (March-April 2020); Wilailuk Okanurak, Pornpan Chayasuntorn, Sutthipong Koohasaneh, Thailand formally regulates cryptocurrencies and digital tokens, Linklaters (n.d.); Pugnatorius S.A. Overseas Advisors | Republic of Panama, Crypto Update.
[6] Aziz Abdel-Qader, Thailand Unveils New Registration Rules for Crypto Asset Managers, Finance Magnates (February 15, 2021).
[7] Aziz Abdel-Qader, Thailand Unveils New Registration Rules for Crypto Asset Managers, Finance Magnates (February 15, 2021); Patcharaporn Pootranon, Veerakom Samranweth, Sompatsorn Liewpolvanit, A Comparison of Developments in Cryptocurrency Regulation, ABLJ, Weerawong C&P (March-April 2020); Wilailuk Okanurak, Pornpan Chayasuntorn, Sutthipong Koohasaneh, Thailand formally regulates cryptocurrencies and digital tokens, Linklaters (n.d.).
[8] Kay Yong, Bunnasomboon Chaiparinya, Yukgrit Kantamanee, Crypto regulation in Singapore and Thailand, Asia Business Law Journal, law.asia (May 13, 2021).
[9] Press Release BOT No. 16/2021, Bank of Thailand, Stablecoins Regulation Policy, Bank of Thailand (March 19, 2021); Kitiphong Thaichareon, Thai central bank plans stablecoins regulations this year, Reuters (March 19, 2021).
[10] Press Release BOT No. 16/2021, Bank of Thailand, Stablecoins Regulation Policy, Bank of Thailand (March 19, 2021); Kitiphong Thaichareon, Thai central bank plans stablecoins regulations this year, Reuters (March 19, 2021).
[11] Pugnatorius S.A. Overseas Advisors | Republic of Panama, Crypto Update.
[12] University of the Thai Chamber of Commerce (UTCC) ASEAN Economic Community Center, Thailand: ID check required for new crypto accounts, (May 13, 2021); Darana Chudasri, ID check required for new crypto accounts, Bangkok Post (May 3, 2021).
[13] Darana Chudasri, ID check required for new crypto accounts, Bangkok Post (May 3, 2021).
