The Bank of Thailand has issued a stern warning against a privately issued stablecoin pegged to the local currency, the Thai Baht.
According to a report by the Bangkok Post on March 18, the central bank told citizens that Thai Baht Digital (THT) has no legal representations or safeguards and that users could be at risk of cyber theft or money laundering
Citing a 60-year-old law, Central Bank Deputy Governor Pruettipong Srimachand stated that all stablecoin-related activities will be considered illegal:
“The creation, issuance, use, or distribution of any material or currency violates Section 9 of the Currency Act 1958.”
The stablecoin is issued on the Terra platform, which has produced various other stablecoins, including TerraUSD, which was first issued in September 2020, and TerraKRW. It is also behind the Chai payments app, an e-commerce wallet filled with stablecoins that is widely used across Asia.
The THT is pegged to the Thai baht and fears that it could fragment the Thai monetary system if it tries to compete with the currency issued by the central bank. Mr. Pruettipong added:
“Such use would ultimately undermine public confidence in the stability of the national monetary system, which is the cornerstone of all economic activity.”
Terra was founded in South Korea in 2018 and supported with $ 32 million from Binance and Polychain. In January 2021, the company behind the platform, Terraform Labs, raised $ 25 million in a new financing round, including from Galaxy Digital, Coinbase Ventures and Pantera Capital.
The military-backed Thai government has adopted a stance similar to that in China, where only the digital currency issued by the central bank is officially tolerated. China has accelerated its program for the release of the CBDC with further pre-launch infrastructure tests that could coincide with the Beijing Winter Olympics in 2022.
The Bank of Thailand accelerated its own investigations into a national CBDC on Feb.23, announcing a joint coalition effort with the Hong Kong Monetary Authority, the Central Bank of the United Arab Emirates, and the Digital Currency Institute of the People’s Bank of China.