Bank of Thailand Flags Crypto Transactions as Potential Risk to Baht Stability

Executive Summary

The Bank of Thailand (BOT) has identified cryptocurrency transactions as a potential factor influencing the Thai Baht's exchange rate and stability. This stance indicates increased regulatory scrutiny and the possibility of future policy adjustments by the central bank regarding the interaction between digital assets and the national currency, fostering a cautious market sentiment.

The Event in Detail

The Bank of Thailand has articulated its concerns that the widespread engagement in cryptocurrency transactions could affect the stability and trends of the Thai Baht. While acknowledging these potential impacts, BOT spokesperson Chayawadee Chai-anant addressed a statistical discrepancy in the 2024 balance of payments data, the Net Errors and Omissions (NEO) figure. The NEO figure was revised downward from 530 billion baht to 230 billion baht, representing 1.0% of international trade, which is below the global average of 2.4%. Chayawadee clarified this as a routine technical adjustment and not an indication of illicit "grey money" flows. However, the BOT concurrently reiterated its commitment to combating illicit financial activities.

To achieve this, the central bank is implementing several key measures. These include inter-agency collaboration with the Anti-Money Laundering Office (AMLO) and the Securities and Exchange Commission (SEC) to facilitate data sharing on suspicious digital asset transactions. The BOT is also promoting the use of digital payment systems such as PromptPay to create verifiable digital transaction trails and is enforcing stricter Know Your Customer (KYC) standards while actively addressing the use of "mule accounts." The bank maintains a cautious approach to digital assets and urges the government to close legal loopholes susceptible to exploitation by illicit actors.

Market Implications

The Bank of Thailand's expressed concerns and planned measures are expected to increase caution surrounding cryptocurrency-related activities within Thailand. This could lead to stricter regulations governing crypto-fiat gateways and the development of new monitoring frameworks by the BOT to oversee digital asset flows. Digital asset experts have identified a significant factor contributing to the Baht's appreciation: large-scale money laundering operations. These illicit activities involve converting cryptocurrencies into Thai Baht to acquire assets like gold, real estate, and corporate bonds, with estimates suggesting that as much as 500 billion baht may have already been laundered through this channel. A critical challenge highlighted is the lack of reliable data on the daily volume of cryptocurrency transfers into or out of the country, creating loopholes that cross-border crime syndicates may exploit.

Expert Commentary

Dr. Sethaput Suthiwatnarueput, Governor of the Bank of Thailand, articulated on January 30, 2025, the central bank's hesitation to integrate cryptocurrencies into the payment system. He cited the inherent lack of stable value, technological scalability issues, and the potential for fragmentation within the existing payment infrastructure as primary reasons. Dr. Suthiwatnarueput underscored the effectiveness of Thailand's current digital payment platform, PromptPay, as a robust alternative.

Broader Context

Thailand is progressively establishing a structured framework for digital assets, moving towards a model of "regulated innovation" rather than outright prohibition. The Bank of Thailand maintains its prohibition on cryptocurrencies as legal tender but is actively piloting its own digital currency solutions, including a Retail Central Bank Digital Currency (CBDC) and participating in the mBridge project, which focuses on wholesale CBDC for international remittances. The Securities and Exchange Commission (SEC) employs regulatory sandboxes, such as the 2025 tourism program, which allows international visitors to convert digital assets into Baht via licensed operators. Regulatory changes effective in 2025 mandate foreign crypto exchanges to localize their operations, requiring the establishment of legal entities, appointment of local directors, use of Thai bank accounts, and integration of national Anti-Money Laundering (AML) services. Licensing standards from the SEC necessitate compliance with Financial Action Task Force (FATF) algorithms and participation in regulatory sandboxes. Thailand has witnessed a 65% year-on-year increase in digital asset transaction volume, attributed to reforms such as the Digital Assets Act and capital gains tax exemptions for transactions involving licensed cryptocurrencies and tokens conducted on SEC-accredited platforms. AML/KYC requirements for crypto businesses now align with FATF and MiCAR standards, mandating automated client verification, transaction monitoring, and data retention for a minimum of five years.